ACCA BT · Chapter 7
Law and regulation affecting business MCQs with Answers
10 multiple-choice questions on Law and regulation affecting business for ACCA BT Business and Technology. Try each one before revealing the answer and explanation.
Practise this chapter interactivelyQuestion 1
Which of the following is generally a principle of data protection legislation?
- A) Personal data may be used for any purpose once it has been collected
- B) Personal data should be kept for no longer than is necessary for the purpose for which it was collected
- C) Organisations may keep personal data indefinitely in case it is useful later
- D) Individuals have no right to see the personal data held about them
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Answer: B) Personal data should be kept for no longer than is necessary for the purpose for which it was collected
Data protection principles commonly include lawful and fair processing, purpose limitation, data minimisation, accuracy, storage limitation, and security, together with rights for individuals to access their data. Using data for any purpose, indefinite retention and denial of access all contradict these principles.
Question 2
Under typical data protection frameworks, which of the following is the best description of the 'data subject'?
- A) The organisation that decides how and why personal data is processed
- B) The external company that stores data on behalf of another organisation
- C) The living individual to whom the personal data relates
- D) The official regulator that enforces data protection law
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Answer: C) The living individual to whom the personal data relates
The data subject is the individual who can be identified from the personal data. The organisation that determines the purposes and means of processing is the data controller, a third party processing on its behalf is a data processor, and the enforcement body is the supervisory authority.
Question 3
Which of the following best distinguishes an employee from an independent contractor?
- A) An employee is always paid a higher amount than a contractor
- B) A contractor must work for the organisation full time
- C) The employer has a high degree of control over how, when and where an employee performs the work
- D) An employee provides their own equipment and bears their own financial risk
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Answer: C) The employer has a high degree of control over how, when and where an employee performs the work
Tests for employment status include the degree of control, whether the person is integrated into the organisation, and mutuality of obligation. Employees are controlled by the employer, while independent contractors decide how to do the work, provide their own equipment and bear financial risk. Pay level and working hours are not decisive.
Question 4
Under employment law based on the English common law model (as used in the ACCA BT syllabus), an employee is dismissed without being given the period of notice required by their contract of employment. Which claim is most directly based on this breach?
- A) Unfair dismissal
- B) Constructive dismissal
- C) Redundancy
- D) Wrongful dismissal
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Answer: D) Wrongful dismissal
Wrongful dismissal is a common law claim for breach of the employment contract, typically where the employer fails to give the contractual (or statutory minimum) notice; damages are usually limited to pay for the notice period. Unfair dismissal is a separate statutory claim concerning whether the reason for and procedure of the dismissal were fair, and it does not depend on whether notice was given. Constructive dismissal arises when an employee resigns because of the employer's fundamental breach, and redundancy concerns the role ceasing to exist.
Question 5
An employee's role is genuinely no longer required because the business has closed the department in which they work. Under employment law based on the English model (as used in the ACCA BT syllabus), what is the reason for this dismissal?
- A) Misconduct
- B) Capability
- C) Redundancy
- D) Constructive dismissal
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Answer: C) Redundancy
Redundancy occurs when the employer ceases the business, or the business in the place where the employee works, or when the need for employees to carry out work of a particular kind has ceased or diminished. Closing a department is a classic redundancy situation. Misconduct relates to the employee's behaviour and capability to their skill or health, while constructive dismissal is not a reason for dismissal at all: it arises when an employee resigns because of the employer's fundamental breach of contract.
Question 6
Which of the following is generally a duty of an EMPLOYER in relation to health and safety at work?
- A) To ensure employees pay for their own protective equipment
- B) To transfer all responsibility for safety to individual employees
- C) To report every employee's personal health records to competitors
- D) To provide a safe working environment and adequate training in safe working practices
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Answer: D) To provide a safe working environment and adequate training in safe working practices
Employers typically have a duty of care to provide safe premises, safe equipment, safe systems of work, information and training, and competent colleagues. Employees also have duties to take reasonable care, but responsibility is not transferred to them entirely. Charging for protective equipment and disclosing health records are inappropriate.
Question 7
Which body is responsible for developing and issuing International Financial Reporting Standards?
- A) The IFRS Advisory Council
- B) The International Federation of Accountants
- C) The International Accounting Standards Board
- D) Each country's national tax authority
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Answer: C) The International Accounting Standards Board
The International Accounting Standards Board (IASB) is the independent standard-setting body of the IFRS Foundation that develops and issues IFRS. The IFRS Advisory Council provides advice to the IASB, IFAC is the global body for the accountancy profession, and tax authorities do not set financial reporting standards.
Question 8
Which of the following is the role of the IFRS Interpretations Committee?
- A) To appoint the members of the IASB and secure funding for the IFRS Foundation
- B) To review accounting issues arising in the application of IFRS and provide authoritative guidance on them
- C) To audit the financial statements of companies that use IFRS
- D) To enforce compliance with IFRS through fines on listed companies
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Answer: B) To review accounting issues arising in the application of IFRS and provide authoritative guidance on them
The IFRS Interpretations Committee considers widespread issues where divergent or unsatisfactory practice has developed and issues interpretations for ratification by the IASB. Appointing IASB members and overseeing funding is the role of the IFRS Foundation Trustees. Auditing and enforcement are carried out by auditors and national regulators.
Question 9
Why do governments and regulators generally require companies to prepare financial statements in accordance with an accepted set of accounting standards?
- A) To guarantee that every company makes a profit
- B) To improve the comparability and reliability of financial information for users
- C) To remove the need for any professional judgement by accountants
- D) To allow companies to choose whichever accounting policy maximises profit
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Answer: B) To improve the comparability and reliability of financial information for users
Accounting standards narrow the range of acceptable treatments, improving consistency, comparability and credibility of financial statements for investors and other users. They do not guarantee profits, they still require professional judgement, and they are intended to restrict, not encourage, profit-maximising choices.
Question 10
Money laundering is often described as having three stages. In which stage is illegally obtained cash first introduced into the financial system, for example by depositing it in bank accounts?
- A) Layering
- B) Integration
- C) Placement
- D) Disguise
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Answer: C) Placement
Placement is the initial introduction of criminal proceeds into the financial system. Layering involves complex series of transactions to obscure the source of funds, and integration is the reintroduction of the laundered money into the legitimate economy, so it appears to come from lawful sources. 'Disguise' is not a recognised stage.