Month: April 2025

The following statements have been made about the definition of corporate governance set out in the OECD’s Principles of Corporate Governance.

Statement 1 – The practices and procedures for trying to ensure that a company is run in such a way that it achieves its objectives.

Statement 2 – A set of relationships between a company’s management, its board, its shareholders and other stakeholders.

Do these statements match the definition?

Select ONE answer:

1. Statement 1 – Yes, Matches and Statement 2 – No, does not match
2. Statement 1 – No, does not match and Statement 2 – Yes, Matches
3. Statement 1 – Yes, Matches and Statement 2 – Yes, Matches
4. Statement 1 – No, does not match and Statement 2 – No, does not match

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct == > No and Yes
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

The agency problem is a driving force behind the growing importance attached to sound corporate governance.

In this context, the ‘principal’ is?

Select ONE answer:

1. The body of customers
2. The body of shareholders
3. The body of managers
4. The company

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct == > The separation of ownership and control creates a situation where managers act as the agents of owners (shareholders), who are, therefore, the principals.
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

In both bank-based and market-based financial systems, financial intermediation is of increasing importance due to its ability to address the market imperfection of?

Select ONE answer:

1. Monopoly
2. Asymmetric information
3. Trade barriers
4. Tariffs and quotas

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct == > Financial intermediation overcomes the problem of asymmetric information associated with direct financing.
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

In the mythical country of Albion, much of the population has a risk seeking attitude towards financial matters.

Albion’s financial system is therefore likely to be a….?

Select ONE answer:

1. A market-based system
2. A stakeholder system
3. A bank-based system
4. A public policy system

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct == > Household preference for equity (more risk) rather than bank deposits (less risk) means that equity finance is likely to dominate the financing of businesses.
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.