Mirchawala’s Hub of Accountancy:

F4:MOCK Exam 2:
Question#1:
Which two of the following statements about fraudulent trading are correct?
A. It is defined as trading when the person is aware or should have been aware that the company was
insolvent and failed to minimise losses
B. It can result in both a civil and a criminal action
C. Only directors and shadow directors may be liable for fraudulent trading
D. It constitutes trading with the intention to defraud creditors
Question#2:
If a worker is deemed to be an employee, which of the following would NOT be correct?
A. They would benefit from vicarious liability.
B. They would receive their pay gross of all taxable contributions
C. They would receive statutory sick pay
Question#3:
In the context of the law of contract, indicate whether or not each of the following is valid
consideration.
Sort elements
Valid
Not valid
A. Improvements made to a property which the owner later agrees to pay for
B. A promise to undertake decorating work in return for one months accommodation
Question#4:
Which of the following statements about acceptance of an offer in contract law is true?
A. Following a valid acceptance, the offeror can still withdraw from the contract prior to performance
B. There must be some form of positive action by the offeree either spoken, written or by conduct in
order to accept the offer
C. The offeree may choose which terms of an offer to accept
Question#5:
Which TWO of the following statements regarding exclusion clauses are correct?
A. An exclusion clause need not be put forward before the contract is concluded
B. In respect of signed contracts an onerous term must always be highlighted to the other party
C. An exclusion clause can be incorporated into a contract by way of sufficient notice
D. At common law, a person who signs a document which contains an exclusion clause is bound by its
terms even if they have not read the document
Question#6:
Which of the following would NOT terminate an offer?
A. A counter-offer
B. Revocation by the offeror
C. Acceptance
D. Death of the offeree
Question#7:
What does ‘corporate personality’ mean?
A. That the company as an entity is regarded by the law as a separate person
B. That the board of directors as a whole is regarded by the law as a separate person

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C. That the shareholders in the company are regarded by the law as a separate person
Question#8:
Finmere Eagles FC Ltd is a semi-professional football club. John is the majority shareholder and
chairman. He has been personally approving purchases of high-profile footballers for extravagant
transfer fees, while deliberately ignoring creditors for many months. The other directors are concerned
about this, and also about the ability of the club to meet its financial obligations, but have left all major
decisions to John, convinced that he knows best.
To what extent are John and the other directors liable if the company becomes insolvent?
A. John may face charges of fraudulent trading and the other directors may be liable for wrongful
trading
B. Only John may be prosecuted for fraudulent trading and the other directors have no liability
C. All directors and officers may be liable for wrongful trading
D. All directors may face criminal charges for fraudulent trading
Question#9:
Which of the following is NOT an exception to the rule of privity in contract law?
A. Where a person injured in a road accident may sue the driver's insurance company
B. Where there is a restrictive covenant in relation to land
C. Where an implied trust has been created
D. Where an assignment has been made either orally or in writing to a new beneficiary with the
consent of the other party
Question#10:
Are each of the following a feature of a sole trader or a limited company?
Fill the blank with either “Sole Trader” or “Limited Company”.
Profits accrue directly to the owner______ Can continue to exist even after death of the owner______
Limited liability_____ Regulated internally by legislation in terms of procedures and
administration______
Question#11:
Which rule of statutory interpretation suggests that words draw meaning from the other words
around them?
A. Expressio unius est exclusion alterius
B. In pari materia
C. Noscitur a sociis
D. Eiusdem generis
Question#12:
Which of the following in relation to a government bill is NOT correct?
A. It may be introduced in the House of Lords
B. It needs to be passed by the Privy Council
C. It must be passed in the House of Commons and in the House of Lords
Question#13:
Sarah and Hannah have decided to set up business selling curtain fabric. Discussions have taken place
with their solicitor, who is just about to submit documentation to Companies House to form a new
company, Weave Ltd, on their behalf. Yesterday Sarah entered into a long-term supply agreement with
a fabric manufacturer and signed the contract ‘for and on behalf of Weave Ltd.
For each of the following statements, identify whether it is true or false.

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Weave Ltd will be liable under the contract from the date of incorporation______
The contract between Sarah and the supplier can be subsequently ratified by Weave Ltd_____
Question#14:
Sian has obtained the following shares in a public company:
(1)100 shares with a nominal value of £1 each, for which she paid £0.50 per share and will pay the
remainder when requested by the company
(2)500 shares with a nominal value of £1 each, for which she paid nothing but will contribute future
technical expertise
(3)1.000 shares with a nominal value of £1 each, for which she paid £0.50 per share and will be required
to make no further payment
Which of these transactions are unlawful under the provisions of the Companies Act 2006 ?
A. 1, 2 and 3
B. 2 only
C. 2 and 3 only
D. 1 and 3 only
Question#15:
Breach of which of the following types of term NEVER entitles the injured party to repudiate the
contract?
A. Conditions
B. Innominate terms
C. Warranties
Question#16:
Which of the following tests should be applied by an Individual when considering whether to report
suspected money laundering activity?
A. The individual should be certain that an offence is being committed
B. There should be suspicion or reasonable grounds for suspicion
C. There should be reasonable certainty that laundering is taking place
D. The Individual should seek clarification from the client and make a report if appropriate
Question#17:
Which of the following is NOT a feature of a members’ voluntary liquidation?
A. Passing of a special resolution
B. Production of a declaration of solvency
C. Appointment of a liquidator
D. Creation of a liquidation committee
Question#18:
What is the effect of applying the contra proferentem rule to an ambiguity in an exclusion clause?
A. The court will not allow extrinsic evidence to be introduced to explain the meaning of it
B. The court will interpret any ambiguity to give effect to the main purpose of the contract
C. The court will uphold it provided it is fair and reasonable
D. The court will interpret any ambiguity against the person relying on it
Question#19:
Henlys Ltd runs occasional property auctions. Grunty Ltd provides a range of printing services.
For each of the following, indicate if it represents an offer or an invitation to treat.
Sort elements

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Offer offer invitation to treat invitation to treat

A. A poster for an action sale of a house next week at Henly’s Ltd
B. A catalogue and price list circulated by Grunty Ltd for printing various posters
C. A letter from Grunty Ltd to Henly’s Ltd stating the price for printing posters for the house auction
D. A bid at Henly’s Ltd auction sale for a house
Question#20:
Sophia works for TM Ltd. The board of the company treat her as a director, and hold her out as such to
the outside world, even though she has never been properly appointed.
Which of the following describes Sophia’s position as a director?
A. De jure director
B. De facto director
C. Shadow director
D. Mternate director
Question#21:
A general meeting of Lump plc is needed because the directors wish to put a resolution to the members
seeking a change to the articles of association. At least 15% of the members will not vote in favour of
this resolution.
Which TWO of the following statements are true?
A. The directors may call the meeting to be held tomorrow
B. Notice must be sent to all members
C. A notice should contain a brief outline of the resolution proposed
D. The notice must contain a proxy notice, indicating that a member may appoint someone to vote on
their behalf
Question#22:
For each of the following statements regarding types of law, indicate whether it is true or false.
A. Statute law is made by the judiciary
B. Criminal law is part of public law
C. Equity introduced fairness to the legal system
D. Common law developed before equity
Question#23:
Unsure plc has been placed into insolvent liquidation and owes money td the following people:
(1) Terry is owed £50,000 for goods delivered last month
(2) Pat is owed £800 in unpaid wages
(3) Sarah is owed £250,000 on a loan secured via a floating charge validly registered
In what order will the above creditors be paid?
A. 2,1,3
B. 1, 3,2
C. 3,2, 1
D. 2, 3, 1
Question#24:
Which of the following is NOT created by judges?
A. Orders in Council
B. Equity law
C. Common law

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Question#25:
In the case of a member’s voluntary liquidation, which of the following is a responsibility of the
liquidator?
A. To request an ordinary resolution to confirm the appointment
B. To convene a meeting of the company’s creditors
C. To make a statutory declaration of insolvency to the members
D. To call a formal general meeting for members
Question#26:
A mother offers to pay her son. Jayson, £5,000 as an incentive whilst he is studying for his ACCA exams.
She is also the partner in a firm of accountants, which makes him an offer of employment at £35O00 per
year if he successfully completes his studies. Jayson accepts these offers.
Jayson passes his exams but his mother does not pay him the £5,000. He also receives a letter from the
accountants, which says that the job will now only pay £20,000 per year.
For each of these cases, indicate whether or not it will give rise to contractual relationships under
which Jayson may sue for a breach because he will not receive the money he expected
Sort elements
 Yes
 No
A. The job
B. The £5,000 incentive
Question#27:
Which types of company must hold an annual general meeting?
A. Private companies only
B. Both private and public companies
C. Public companies only
Question#28:
Which of the following is a reason treated by a judge as a basis for their decision?
A. Stare decisis
B. Obiter dicta
C. Ratio decidendi
Question#29:
For each of the following statements in relation to the appointment of a company auditor, indicate
whether it is true or false.
True False
A private company may remove an auditor from office before the expiry of their appointment by passing
a written resolution
The Secretary of State may appoint an auditor to a company if its members fail to do so
Question#30:
For each of the following statements regarding the limited liability of a partner for partnership debts,
indicate whether it is true or false.

A. In a limited partnership, there must be at least one general partner who is personally liable for the
full amount of partnership debts

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B. In a limited liability partnership, it is the partnership who is liable for partnership debts
Question#31:
What remedies are available to the injured party if a condition of the contract is broken?
A. Damages only
B. Damages and repudiation of the contract
C. Repudiation only
Question#32:
Billy bought Ade’s car for £1 ,000. Billy gave the car to Chloe, his wife. The car had a faulty gearbox and
has just broken down and is irreparable.
In relation to privity of contract which of the following statements is true?
A. Billy can sue Ade
B. Chloe can sue Ade
C. Chloe can sue Billy
D. There is no right to sue
Question#33:
GGG Ltd intends to open a new shop in Arcadia, a country in which the company has not done business
before, The board of GGG Ltd has learned that it is customary for the planning permission process for
new premises to be accelerated by paying a substantial facilitation fee personally to the Minister of
Foreign Affairs of Arcadia.
What is the position in respect of any potential criminal offence being committed if the facilitation fee
is paid?
A. There is no potential criminal liability, as the transaction would take place outside the UK
B. There is no potential criminal liability, as the recipient is not a UK citizen
C. GGG Ltd may be liable for carrying out a fraudulent transaction
D. GGG Ltd may be guilty of bribing a foreign public official
Question#34:
For each of the following statements in relation to a company’s powers to borrow money, indicate
whether it is true or false.
A. A company has an implied power to borrow money for whatever purpose it sees lit, including both
business and non-business activities
B. A lender can require the directors to personally guarantee to repay a loan made to the company in
the event of default by the company
Question#35:
Which companies must appoint a company secretary?
A. Private companies only
B. Public companies only
C. Both public and private companies
MTQ’S:
Question#36:
In May 20X7, Djimi considers making a long-term investment in Goga plc. He has the option of
purchasing ordinary shares or debentures but he is struggling to decide what would be the most
appropriate for him.

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Task 1:
For each of the characteristics listed below, indicate whether it is true of debentures or ordinary
shares.
A. Will be repaid first upon liquidation
B. Allows participation in general meetings
C. Provides a regular regardless of Goga plc’s profitability
D. Can be priced at a level below their nominal value
Task 2:
In June 20X8, Goga plc needs to secure a substantial loan in order to continue trading. It is negotiating
with LBC bank, which has suggested a fixed charge over the company’s premises for the debt.
Which of the following statements about the proposed fixed charge is NOT true?
A. It provides good long-term security because Goga plc will always need somewhere from which to
trade
B. If the premises were to be sold to a third party, then the third party can never be liable for the debt.
C. It will rank after a fixed charge created last month in terms of repayment priority
D. It will rank before a floating charge created on the following day in terms of repayment priority
Task 3:
On 3 July 20X8, ABC bank lends £100,000 to Goga plc. It takes a floating charge over Goga’s entire
assets. The bank included a clause as part of the charge prohibiting Goga plc from creating any
subsequent fixed charge over its assets.
Which charges will take priority over ABC bank’s floating charge?
A. Only fixed charges made before 3 July 20X8
B. Only fixed charges made after 3 July 20X8
C. Only floating charges made after 3 July 20X8
D. Fixed or floating charges made before 3 July 20X8
Question#37:
Arlene is the finance director of TTT plc, whose shares are listed on the London Stock Exchange. She
attended a board meeting at which a decision was taken to make a takeover bid for VVV plc, which was
also listed. It was agreed that the bid would be announced in one week’s time.
Arlene attended a family function on the evening following the board meeting. Danny, her brother who
works as a financial journalist, was at the function. Arlene and Danny talked about their respective jobs,
and in the course of the conversation Arlene said, ‘keep it to yourself, but there is big news corning next
week. We are making a bid for VVV plc.’
The conversation was overheard by Susan, a distant family member who Arlene had never met.
Both Danny and Susan then bought shares in WV plc and both made a substantial profit by selling the
shares when the takeover was completed.
Task 1:
Which offences relating to insider dealing has Arlene potentially committed?
(1) Disclosing price sensitive information
(2) Dealing in price-affected securities
(3) Encouraging another to deal
A. 3 only
B. 1 only

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C. 1, 2 and 3
D. 1 and 3 only
Task 2:
For each of the people below, indicate whether, by acting on the information received at the function,
they have potentially committed offences under insider dealing legislation.
A. Danny
B. Susan
Task 3:
Which TWO of the following are defences that can be offered by an individual accused of dealing
contrary to the Criminal Justice Act 1993?
A. The information related to debentures and not shares
B. Belief that the information had been disclosed publicly
C. The transaction in the shares would have been made without having access to the information
D. The individual did not make a profit (or avoid a loss)
Question#38:
Edward is the majority shareholder in CTF plc, controlling 80% of the company’s shares, Although
Edward has not been appointed to the board of directors of CTF plc, he regularly gives instructions to
the company’s board which they are accustomed to follow.
One member of the CTF plc board of directors is Ahmed. Ahmed needs hospital treatment and knows
that he will be absent over the coming months, Ahmed wants to appoint his friend David to act as his
alternate during his absence.
Task 1:
Which TWO of the following statements regarding company directors are correct?
A. A person may be both a director and an employee of the same company
B. A person expressly appointed as a director is known as a de jure director
C. All companies must appoint at least one non-executive director to its board of directors
D. Both public and private companies must appoint at least two directors
Task 2:
For each of the following statements regarding Edwards’s position in the company, indicate whether it
is true or false.
A. Edward is a de factor director of CTF plc
B. Edward is a shadow director of CTF plc
Task 3:
Which TWO of the following statements describe David’s position as an alternate director?
A. He can only be appointed as Ahmed’s alternate if the articles of association allow for such an
appointment
B. While acting as Ahmed’s alternate, David cannot accept appointment as a director of any other
company
C. He would be entitled to attend and vote at board meetings on Ahmed’s behalf
D. He must be at least 18 years old and a UK resident to be eligible for appointment as an alternate
director
Question#39:
SWS plc is a marketing consultancy company, AFA Ltd. a small retail company, has approached it for
marketing advice. As AFA Ltd was a new client, SWS plc contacted AFA Ltd’s bankers, who confirmed

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that the company was credit-worthy. As a result, SWS plc agreed to provide the consultancy services
requested. However, it is now clear that AFA Ltd’s bankers negligently provided the positive credit
reference. AFA Ltd is unable for pay SWS plc for the consultancy services.
Task 1:
Which of the following statements regarding the credit reference provided by the bankers to SWS plc
s correct?
A. The bankers owed SWS pc a duty of care because they knew that SWS plc were relying on the credit
I reference
B. As no contract existed between SWS plc and the bankers, SWS plc cannot claim compensation for
the negligent credit reference
C. The bankers cannot be held liable to SWS plc because it is AFA Ltd who is solely responsible for the
debt it incurred
D. As the loss suffered by SWS plc was purely financial, the bankers’ negligence cannot amount to a
breach of their duty of care
Task 2:
SWS plc decided to acquire a local competitor, DFE Ltd. Prior to finalizing its bid, SWS plc arranged a
meeting with DFE Ltd’s auditors. SWS plc made it clear to the auditors that it was considering making a
takeover bid for DFE Ltd. The auditors confirmed that DFE Ltd’s accounts showed a true and fair view.
Following the meeting, SWS plc made a bid for DFE Ltd which was accepted. It has since come to light
that he accounts overstated DFE Ltd’s assets, and that SWS plc paid too much for DFE Ltds. shares.
For each of the following statements regarding the advice SWS plc received from DFE Ltd’s auditors,
indicate whether it is true or false.
A. DEE Ltd’s auditors owe a duty of care to their client, EWE Ltd1 but they do not owe a duty of care to
SWS plc in respect of its takeover bid for their client
B. SWS plc will not be able to recover from the auditors the amount it overpaid for DEE Ltd’s shares,
because DFP Ltd’s accounts were prepared for its shareholders as a body and not for the purposes
of SWS pc’s takeover.
Task 3:
Which of the following statements regarding establishing liability for negligence is NOT true?
A. To establish a duty of care, a claimant must show a relationship of proximity between the claimant
and the defendant
B. In order to establish liability, the claimant must show that harm was foreseeable
C. A duty of care can only arise if a contractual relationship exists between the parties
D. Where the most likely cause of an accident is negligence, the burden of proof can be reversed such
that the defendant must prove they were not negligent
Question#40:
Alex, Sunil arid George are in partnership running a small office supply business. Their partnership
agreement states that the firm will only supply items of stationery. The partners have specifically agreed
not to purchase large items, such as printers and photocopiers, for resale.
One evening George met Omar, a photocopier salesman, at a charity dinner. Omar had previously tried,
unsuccessfully, to sell photocopiers to the firm. The partners told Omar that their business did not
involve selling photocopiers. However, at the charity dinner, Omar persuaded George to buy two
photocopiers.

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Alex and Sunil have now found out about the purchase of the photocopiers and are refusing to pay the
balance due.
Task1:
Which of the following types of authority does George have to buy the photocopiers?
A. Implied
B. None
C. Ostensible
D. Express
Task 2:
Which of the following statements regarding the liability to pay for the photocopiers is correct?
A. George is personally liable to pay Omar for the photocopiers
B. Omar can claim the full cost of the photocopiers from any partner
C. The firm must pay for the photocopiers and then recover the money from George
D. The firm is liable to pay Omar for the photocopiers George ordered
Task 3:
For each of the following statements regarding a partner’s authority, identify whether the statement
is true or false.
A. A partner is personally liable where, without specific authority, they pledge the firm’s credit for a
purpose not connected with the firm’s ordinary business
B. All partners can bind the firm and no restriction can be placed on any one partner’s authority

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