CMA Inter Suggested Answers | Jun 25 Law & Ethics | ICMAI Suggested Answers

Table of contents

1. MCQs
2. 2 (a) : Outline the points which shall be considered
3. 2 (b) : What are the rights of an indemnity holder under
4. 3 (a) : Demonstrate the procedure of forming a partnership 
5. 3 (b) : How condition is different fromn warranty under
6. 4 (a) : Elaborate the provisions relating to the fines under
7. 4 (b) : Demonstrate the benefits that the insured persons,
8. 5 (a) : Examine the provisions of the Companies Act, 2013
9. 5 (b) : Critically evaluate the different duties and liabilities
10. 6 (a) : Analyze the concept of operational and financial
11. 6 (b) : State the powers which the Board of Directors of 
12. 7 (a) : According to the CFAI's website, explain the Code
13. 7 (b) : Discuss four attributes commonly used in defining
14. 8 (a) : Mr. A bails 1000 bottles of energy drinkS marked 
15. 8 (b) : Mr. Mohan is a Director of a company, MCI Ltd. 

CMA Inter Jun 25 Suggested Answer Other Subjects Blogs :

1. Suggested Answer Jun 25 Paper 6 : Financial Accounting
2. Suggested Answer Jun 25 Paper 7 : Direct and Indirect Taxation
3. Suggested Answer Jun 25 Paper 8 : Cost Accounting (CA)
4. Suggested Answer Jun 25 Paper 9 : Operations Management and Strategic Management
5. Suggested Answer Jun 25 Paper 10 : Corporate Accounting and Auditing
6. Suggested Answer Jun 25 Paper 11 : Financial Management and Business Data Analytics
7. Suggested Answer Jun 25 Paper 12 : Management Accounting
8. CMA Inter Syllabus (New Updates)
9. CMA Intermediate Online Classes

Section A

MCQs

(i) Lok Adalats or People’s Courts have been established by the government to settle disputes by way of
(A) Conciliation
(B) Debating
(C) Sacrifice
(D) Glorification

Solution: (A) Conciliation

Choice 'A' is correct as 

Lok Adalats are forums established under the Legal Services Authorities Act, 1987, for the settlement of disputes through conciliation and compromise, not by judicial decisions or debates.

(ii) When the consent is caused by undue influence, the agreement under Section 19A is
(A) Illegal
(B) Valid
(C) Void
(D) Voidable

Solution: (D) Voidable

Choice 'D' is correct as 

When consent is obtained through undue influence, the contract is considered voidable under Section 19A of the Indian Contract Act. This means that the affected party has the option to either affirm or reject the contract. So, option D (Voidable) is correct because the contract influenced by undue influence is not automatically void or illegal but can be voided by the affected party.

(iii) An unlawful act by which an intending purchaser is prevented from bidding or raising the price at an auction sale is known as
(A) Decoy Ducking
(B) Pufferring
(C) Damping
(D) None of the above

Solution:

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(iv) The Negotiable Instruments Act makes specific mention of three instruments namely Cheque, Bill of Exchange and
(A) Promissory Note
(B) Hundi
(C) Bank Draft
(D) Customary Note

Solution:

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(v) In an LLP, which partners are typically not involved in the day to day operations and decision making?
(A) Limited Partners
(B) Active Partners
(C) Managing Partners
(D) Nominal Partners

Solution:

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(vi) Certificate of fitness to the young worker is to be granted by
(A) occupier of the factory
(B) certifying surgeon
(C) inspector of the factory
(D) any sports person

Solution: (B) certifying surgeon

Choice 'B' is correct as 

In some countries, a certificate of fitness to work as a young worker is required by law, and this certificate is usually granted by a certifying surgeon or a doctor. The purpose of this certificate is to ensure that the young worker is physically and mentally capable of performing the job they have applied for. The certifying surgeon or doctor would examine the young worker's health, and determine whether they are fit to work in a particular job. The requirements for obtaining this certificate may vary depending on the country and the job being applied for.

(vii) Who among the following is not the Principal Employer?
(A) Occupier of the factory
(B) Owner of the factory
(C) Legal representative of the owner
(D) Legal representative of the contractor

Solution: (D) Legal representative of the contractor

Choice 'D' is correct as

As per the provisions of the Contract Labour (Regulation and Abolition) Act, 1970 in India, the Principal Employer is defined as a person who employs contract labour for any work in his establishment. The Principal Employer is responsible for ensuring the welfare and safety of the contract labourers while they are working on his premises.

The Legal representative of the contractor is not the Principal Employer. The contractor, who is responsible for employing the contract labour, is considered the Principal Employer. The legal representative of the contractor could be a person authorized by the contractor to represent him in legal matters or an appointed legal heir in case of the contractor's death. However, the legal representative of the contractor does not become the Principal Employer by virtue of being a legal representative.

(viii) After buy back, a company shall not make a further issue of shares within a period of
(A) three months
(B) six months
(C) nine months
(D) one year

Solution:

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(ix) Every company limited by shares shall keep and maintain the Register of Members in Form No.
(A) MGT-1
(B) MGT-7
(C) MGT-9
(D) MGT-12

Solution:

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(x) The matters that shall be contained in the Articles of Association of a company limited by shares, have been prescribed in Table _______ of Schedule I of the Companies Act, 2013.
(A) D
(B) E
(C) F
(D) G

Solution:

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(xi) An eligible company, which is accepting deposits within the limits specified under Section 180(1)(c) of the Act may accept the deposits by means of
(A) an Ordinary Resolution
(B) a Special Resolution
(C) a Board Resolution
(D) an Audit Committee Resolution

Solution:

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(xii) What is the paid up share capital fixed for the appointment of a woman director?
(A) ₹100 crore or more
(B) ₹300 crore or more
(C) ₹400 crore or more
(D) ₹500 crore or more

Solution: (A) ₹100 crore or more

Choice "A" is Correct as

As Companies (Appointment and Qualification of Directors) Rules,2014

The following class of companies shall appoint at least one woman director-

• every listed company;
• every other public company having –
• paid–up share capital of one hundred crore rupees or more; or
• turnover of three hundred crore rupees or more

(xiii) In respect of the properties and assets of the company the Directors or the Board of Directors act as
(A) Escorts
(B) Guards
(C) Trustees
(D) Keepers

Solution:

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(xiv) It is a popular theme. Innovation related to this area in costing is kaizen costing. What is the name of this theme?
(A) Continuous improvement
(B) Customer focus
(C) Value chain
(D) Supply chain

Solution:

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(xv) Moral management requires ethical leadership. It entails more than just
(A) ‘not doing wrong’.
(B) ‘not doing untrue’.
(C) ‘not doing false’.
(D) ‘not doing incorrect’.

Solution: (A) ‘not doing wrong’

Choice 'A' is correct as--

Moral management involves ethical leadership and a proactive commitment to doing what is right.

It entails more than just 'not doing wrong'; it also involves actively promoting ethical behavior and integrity in decision-making.

Section B

Question 2 (A):

Outline the points which shall be considered for acceptance of a Contract. 

Solution:

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Question 2 (B):

What are the rights of an indemnity holder under Indian Contracts Act, 1872, when sued?

Solution:

Rights of Indemnity- holder when sued (Section 125): The promisee in a contract of indemnity, acting within the scope of his authority, is entitled to recover from the promisor-

(1) all damages which he may be compelled to pay in any suit in respect of any matter to which the promise to indemnify applies;

(2) all costs which he may be compelled to pay in any such suit if, in bringing or defending it, he did not contravene the orders of the promisor, and acted as it would have been prudent for him to act in the absence of any contract of indemnity, or if the promisor authorised him to bring or defend the suit;

(3) all sums which he may have paid under the terms of any compromise of any such suit, if the compromise was not contrary to the orders of the promisor, and was one which it would have been prudent for the promisee to make in the absence of any contract of indemnity, or if the promisor authorised him to compromise the suit.

It may be understood that the rights contemplated under section 125 are not exhaustive. The indemnity holder/ indemnified has other rights besides those mentioned above. If he has incurred a liability and that liability is absolute, he is entitled to call upon his indemnifier to save him from the liability and to pay it off.

(This Question is a part of konceptca.com question bank)

Question 3 (A):

Demonstrate the procedure of forming a partnership under the Indian Partnership Act, 1932. 

Solution:

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Question 3 (B):

How condition is different fromn warranty under Sales of Goods Act, 1930? Under what circumstances condition can be treated as warranty? 

Solution:

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Question 4 (A):

Elaborate the provisions relating to the fines under Section 19 of The Code on Wages, 2019 Act. 

Solution:

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Question 4 (B):

Demonstrate the benefits that the insured persons, their dependents shall be entitled under the Employees' State Insurance Act, 1948. 

Solution:

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Question 5 (A):

Examine the provisions of the Companies Act, 2013 with reference to the publication and change of company's name. 

Solution:

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Question 5 (B):

Critically evaluate the different duties and liabilities imposed on the directors of companies as per the Companies Act, 2013. 

Solution:

The following duties and liabilities have been imposed on the directors of companies, by the Indian Companies Act of 2013, under its Section 166: -

1. A director of a company shall act in accordance with the Articles of Association of the company.
2. A director of the company shall act in good faith, in order to promote the objects of the company, for the benefits of the company as a whole, and in the best interests of the stakeholders of the company.
3. A director of a company shall exercise his duties with due and reasonable care, skill and diligence and shall exercise independent judgment.
4. A director of a company shall not involve in a situation in which he may have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the company.
5. A director of a company shall not achieve or attempt to achieve any undue gain or advantage either to himself or to his relatives, partners, or associates and if such director is found guilty of making any undue gain, he shall be liable to pay an amount equal to that gain to the company.
6. A director of a company shall not assign his office and any assignment so made shall be void.

(This Question is a part of konceptca.com question bank)

Question 6 (A):

Analyze the concept of operational and financial control in a large organization. 

Solution:

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Question 6 (B):

State the powers which the Board of Directors of a Company can exercise by means of resolutions. passed at the Board Meetings as per the Companies Act, 2013. 

Solution:

The Board of Directors of a company shall exercise the following powers on behalf of the company by means of resolutions passed at meetings of the Board, namely:  

1. to make calls on shareholders in respect of money unpaid on their shares; 
2. to authorize buy-back of securities under Section 68;
3. to issue securities, including debenture, whether in or outside India; 
4. to borrow monies; 
5. to invest the funds of the company; 
6. to grant loans or give guarantee or provide security in respect of loans; 
7. to approve financial statement and the Board’s report; 
8. to diversify the business of the company; 
9. to approve amalgamation, merger or reconstruction; 
10. to take over a company or acquire a controlling or substantial stake in another company; 
11. any other matter which may be prescribed: 

Provided that the Board may, by a resolution passed at a meeting, delegate to any committee of directors, the managing director, the manager or any principal officer of the company or in the case of a branch office of the company, the principal officer of the branch office, the powers specified in clauses (d) to (f) on such conditions as it may specify. 

(This Question is a part of konceptca.com question bank)

Question 7 (A):

According to the CFAI's website, explain the Code of Ethics which must be adhered by the Members of CFA Institute. 

Solution:

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Question 7 (B):

Discuss four attributes commonly used in defining emotional intelligence and briefly state its importance. 

Solution:

Question 8 (A):

Mr. A bails 1000 bottles of energy drinkS marked with five star to Mr. B. After receiving the energy drinks, Mr. B, without Mr. A's consent, mixes the 1000 bottles with other bottles of energy drinks of his own, bearing a different mark.

Two days later, Mr. A requests to Mr. B to return at least 500 bottles of energy drinks marked with five star, on urgent basis. But, Mr. B refuses to do so and informes Mr. A that he has mixed all bottles of energy drinks with the stocks of other energy drinks kept in the warehouse. So, Mr. B will have to separate the bottles of energy drinks received from Mr. A by deploying additional labourers and then only it will possible to send back the 500 bottles of energy drinks for which Mr. A will have to pay the labour charges.

Mr. A is not willing to pay any labour charges and asks Mr. B to return at least 500 bottles of energy drinks sent by him immediately.

Decide the case and present your expert opinion. 

Solution:

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Question 8 (B):

Mr. Mohan is a Director of a company, MCI Ltd. Company has received a notice on Sth July, 2024 from the Government Department for non-compliance of laws by the company. Mr. Mohan has sent his resignation unilaterally to the Company Secretary on 6th July, 2024 without sending a notice to the Registrar of Companies (ROC) stating that he resigns from the company owing to his personal reason with effect from (w.e.f.) lst July, 2024. The Chairman accepted the resignation of Mr. Mohan w.e.f. 9th July, 2024 on the day of receipt of letter, subject to his liability for non compliance of laws during his tenure. Another Director of the company, Mr. A, is arguing that the resignation is not valid as it has not been forwarded to the ROC. Mr. Mohan has clearly stated in his resignation letter that he will no more available and liable for the company in future for any purposes.

Examine validity of the resignation with reference to the provisions of the Companies Act, 2013 and decide the liability of Mr. Mohan for non-compliance of laws during his tenure. 

Solution:

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