Free ICAEW ACA Business Law Practice Questions

Sample Practice Questions

Try these 10 sample questions from the ICAEW ACA Business Law practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

1. 1A proposal to change English legislation has been introduced for debate in Parliament. Before enactment, what is this proposal called?

   1. A.An Act of Parliament
   2. B.A statutory instrument
   3. C.A BillCorrect answer: C
   4. D.A judicial precedent

   Explanation: The source states: "A Bill is a proposal for a new law, or a proposal to change an existing law, that is presented for debate before Parliament." A proposal under parliamentary debate is a Bill. An Act is enacted primary legislation, a statutory instrument is a form of secondary legislation, and a precedent arises from judicial decisions.

   Reference: UK Parliament: How are laws made? — What is a bill?

2. 2A wholesaler and retailer orally agree all terms of an ordinary goods sale. No special statutory formality applies. Which statement about the form of their agreement is correct?

   1. A.It must be witnessed before either party can enforce it
   2. B.It must be registered before the sale can become binding
   3. C.It must be executed as a deed to transfer any goods
   4. D.It may form a sale contract despite being entirely oralCorrect answer: D

   Explanation: The Act states: "a contract of sale may be made in writing (either with or without seal), or by word of mouth" Section 4 permits an oral sale contract; the facts exclude any special formality. Witnessing, registration and execution as a deed are not general conditions for this ordinary sale.

   Reference: Sale of Goods Act 1979 — s.4(1)

3. 3What legal effect of incorporation is stated in section 16(2) of the Companies Act 2006?

   1. A.The subscribers remain the sole legal persons carrying on the business
   2. B.The subscribers and later members constitute a body corporate under the registered nameCorrect answer: B
   3. C.The company becomes an agent of each member for every transaction
   4. D.The company acquires legal personality only after its first profitable year

   Explanation: The authority states: "are a body corporate by the name stated in the certificate of incorporation." Registration creates the body corporate from incorporation. It is not merely a continuing unincorporated group, automatic agency or a status dependent on future profits.

   Reference: Companies Act 2006 — s.16(2)

4. 4An accountant knowingly conceals domestic criminal proceeds. No statutory defence or exception applies. They argue that money laundering requires moving the money abroad. Which statement correctly applies section 327 of the Proceeds of Crime Act 2002?

   1. A.The funds must first be transferred outside the United Kingdom
   2. B.The accountant must personally own all the criminal property
   3. C.Concealment can be an offence without a cross-border transferCorrect answer: C
   4. D.The accountant must already be convicted of the underlying crime

   Explanation: Section 327 expressly includes a person who "conceals criminal property;". Concealment is itself listed conduct; the offence is not restricted to moving funds abroad, personal ownership or a prior conviction of the concealer. The facts establish knowledge and exclude statutory exceptions.

   Reference: Proceeds of Crime Act 2002 — s.327(1)(a)–(b)

5. 5A payroll team defines the personal data genuinely needed to calculate pay. Which collection approach follows the UK GDPR data-minimisation principle?

   1. A.Collect every detail an employee volunteers, regardless of payroll relevance
   2. B.Collect adequate, relevant data limited to what that payroll purpose requiresCorrect answer: B
   3. C.Collect extra personal histories solely because a future use might emerge
   4. D.Collect so little information that correct pay cannot be calculated

   Explanation: The source states: "adequate, relevant and limited to what is necessary in relation to the purposes for which they are processed" Minimisation requires enough relevant information for the stated purpose, but no unnecessary excess. Voluntary provision or speculative future usefulness does not remove that requirement, and inadequate data is not the goal.

   Reference: UK General Data Protection Regulation — Art.5(1)(c)

6. 6What supplies the legal authority for secondary legislation made to change detailed rules?

   1. A.Powers provided by an existing Act of ParliamentCorrect answer: A
   2. B.An election promise made by the governing party
   3. C.Agreement reached by the affected trade association
   4. D.A recommendation issued by a parliamentary committee

   Explanation: The source states: "Secondary legislation is used to make changes to law if the existing act of Parliament allows it." Secondary legislation depends on authority granted by an existing Act. A promise, trade agreement or committee recommendation does not itself confer legislative power.

   Reference: UK Parliament: How are laws made? — What is Secondary Legislation?

7. 7A contract expressly gives enforcement rights to any company within a defined group, including a subsidiary that will be formed next year. Must that subsidiary already exist when the contract is made to be identified as a third-party beneficiary under section 1(3) of the 1999 Act?

   1. A.Yes, because a beneficiary must sign the original contract
   2. B.No, because the specified beneficiary need not yet existCorrect answer: B
   3. C.Yes, because only companies named individually qualify
   4. D.No, because every future company can enforce the term

   Explanation: The Act states: "The third party must be expressly identified in the contract by name, as a member of a class or as answering a particular description but need not be in existence when the contract is entered into." Identification by the defined class is sufficient even before the subsidiary exists. This does not give rights to every future company, and signature or individual naming is not required by subsection (3).

   Reference: Contracts (Rights of Third Parties) Act 1999 — s.1(3)

8. 8In a company limited by shares, to what amount is a member's liability as member limited under section 3(2) of the Companies Act 2006?

   1. A.All debts outstanding when the member joined the company
   2. B.The total nominal capital held by every member collectively
   3. C.The amount, if any, unpaid on that member's sharesCorrect answer: C
   4. D.The amount of dividends received since the company was formed

   Explanation: The authority states: "limited to the amount, if any, unpaid on the shares held by them" This concerns the member's unpaid share amount. It is distinct from the company's own debts, aggregate capital and past dividends; other personal liabilities are not being asked about.

   Reference: Companies Act 2006 — s.3(2)

9. 9A regulated-sector accountant suspects a named client is laundering money based on information received in that work. No privilege, reasonable excuse or other exemption applies. What does section 330 require concerning the timing of the required disclosure to the nominated officer or authorised recipient?

   1. A.As soon as practicable after the relevant information comes to the accountantCorrect answer: A
   2. B.Only after the client has agreed that the suspicion is well founded
   3. C.At the next annual review, even if an earlier report is practicable
   4. D.Only after a criminal conviction proves the laundering occurred

   Explanation: The legislation states: "as soon as is practicable after the information or other matter mentioned in subsection (3) comes to him." The disclosure duty is prompt in the statutory sense, not conditional on client agreement or conviction and not deferred automatically until the annual review.

   Reference: Proceeds of Crime Act 2002 — s.330(4)

10. 10What does the UK GDPR integrity-and-confidentiality principle require a business to do when handling personal data?

    1. A.Guarantee that no security incident can ever occur
    2. B.Use paper records instead of technical safeguards in every case
    3. C.Rely on employee consent instead of organisational security
    4. D.Apply appropriate technical or organisational measures to secure the dataCorrect answer: D

    Explanation: The source states: "using appropriate technical or organisational measures" The obligation is appropriate security measures, including protection against unauthorised processing and accidental loss. It is not an absolute guarantee, a paper-only rule or a safeguard waived by consent.

    Reference: UK General Data Protection Regulation — Art.5(1)(f)