ACCT 340 final

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In a member-managed limited liability company (LLC), each member has the right to ________.

sign contracts on behalf of the LLC

Joint tenancy is a form of co-ownership that includes the right of _____.

survivorship

What is a seller or lessor's basic obligation?

tender of delivery

Who is liable for a corporation's debts and obligations?

the corporation

In a quitclaim deed ________.

the grantor doesn't guarantee that he or she owns the property

A tenancy in common is a form of co-ownership in which ________.

the interest of a surviving tenant in common passes to the deceased tenant's estate and not to the co-tenants

Which of the following is NOT covered by home owners' insurance?

the items of a neighbor destroyed by the owner of the insurance

Real property is best described as ________.

the land itself as well as buildings, trees, soil, minerals, timber, plants, and other items permanently affixed to the land

The Delaware corporation code benefits large corporations because ________.

the legislature keeps amending the code as the demands of big business warrant such changes

According to the Revised Model Business Corporation Act (RMBCA), the articles of incorporation must include which of the following?

the name and address of each incorporator

Once the seller tenders delivery of the goods, what is the buyer's general obligation?

to accept and pay for the goods

When is a sale or lease contract formed?

when the offeree sends the acceptance

An easement appurtenant is created ________.

when the owner of one piece of land is given an easement over an adjacent piece of land

Jessica verbally agrees to sell her computer to Jordan for $550. When Jordan tenders the purchase price, Jessica asserts the Statute of Frauds and refuses to sell the computer to him. Jessica is _____.

within her rights to do so

If all of the elements of adverse possession are met, the adverse possessor may acquire ______________ title to the property, so long as there are no defenses which are meritorious proffered by the current owner.

clear

In a _________, a seller delivers the goods to a buyer to sell on his or her behalf.

consignment

The FTC HDC rule eliminates holder in due course status with regard to negotiable instruments in ____________ transactions.

consumer

Under a Chapter 13 petition, the debts of the individual debtor must be primarily ________________ debt.

consumer

The special court that hears and decides business cases in Delaware known as the ________.

court of chancery

Rosemary has just purchased a new home in Colorado and decides to purchase fire insurance for her home. Three months after she moves in, a massive wildfire engulfs her neighborhood, destroying her home. The policy's replacement cost insurance will ________.

cover the costs of replacing Rosemary's destroyed home

In a winding up of a corporation, which of the following claimants will have highest priority?

creditors

Which of the following is NOT a way in which a corporation may be dissolved and terminated?

criminal dissolution

While you are shopping at Trader Joe's, your car is hit in the parking lot and suffers damage to the passenger side doors. Your car's collision insurance covers ________.

damage resulting from your car being hit by another car

A(n) _____ clause provides that insurance proceeds are payable only after the insured has paid a certain amount of the damage or loss.

deductible

What are the two primary duties of an insurer?

defend and pay

The right to receive a fixed dividend at set periods during the year is known as ________.

dividend preference

A person's ownership right in real property is called a(n) ________.

estate in land

A(n) _____ clause prevents insurers from contesting statements made by insureds in applications for insurance after the passage of a stipulated number of years.

incontestability

A(n) ________ is a clause that prevents insurers from contesting statements made by insureds in applications for insurance after the passage of a stipulated number of years.

incontestability clause

To form a corporation, the organizers must follow the requirements set forth by the corporation code of the state in which the corporation is to be incorporated. This process is called ________.

incorporating a corporation

You and your twin brother decide to start a carpentry business called Bro & Bro Carpentry. If Bro & Bro Carpentry is a closely held corporation, ________.

its shares are owned by only a few shareholders who are family members, relatives, and friends

A form of co-ownership that includes the right of survivorship is known as ________.

joint tenancy

In a lease contract, who is the person(s) who transfers the right of possession and use of goods under the lease?

lessor

A premium is ________.

money paid to an insurance company

An insurance contract is called a(n) _____.

policy

Regarding dissolution of a limited liability company (LLC), all of the following statements are true EXCEPT?

A disassociating member's duties of loyalty and care to the LLC do not terminate upon disassociation from the LLC.

To meet this duty, the directors and officers must discharge their duties (1) in good faith, (2) with the care that an ordinary prudent person in a like position would use under similar circumstances, and (3) in a manner they reasonably believe to be in the best interests of the corporation. These requirements pertain to which duty of directors and officers?

A duty of care

Scott is a corporate officer at Bluegold Corporation. Its articles of incorporation authorize the corporation to invest in real estate only. However, Scott invests some corporate funds in the commodities markets. Scott is then liable to Bluegold Corporation for any losses suffered because he violated which of the following director's and officer's duties?

A duty of obedience

Which of the following is a clause that can be included in the articles of incorporation that permits the corporation to engage in any activity permitted by law?

A general-purpose clause

Which type of bankruptcy involves liquidation?

Chapter 7

Which of the following is an INCORRECT statement regarding common stock?

Common stock has a fixed maturity date.

Which of the following statements about automobile liability insurance is NOT true?

Comprehensive automobile insurance is a form of insurance that insures an automobile from loss or damage due to collision.

________ is a form of property insurance that insures an automobile from loss or damage due to causes other than collision.

Comprehensive insurance

Which of the following is an INCORRECT statement regarding the duration of a corporation's existence?

Corporations automatically expire twenty (20) years after the secretary of state's issuance of a certificate of incorporation unless the owners of the corporation expressly petition the secretary of state for a renewal of the corporate charter.

What is the rule adopted by the Federal Trade Commission that eliminates holder in due course status with regard to negotiable instruments that arise out of certain consumer credit transactions?

FTC HDC Rule

Which of the following statements about a life insurance contract is true?

If no beneficiary is named, the proceeds go to the insured's estate.

Which of the following statements is false regarding implied warranties for negotiable instruments?

Implied warranties are made when a negotiable instrument is originally issued.

Which of the following is NOT true about workers' compensation insurance?

In most instances, the injured employee can sue the employer for liability if the workers' compensation award is too low.

Which of the following is NOT true about a cooperative?

Individual residents may secure loans for the units they occupy.

Which of the following is NOT a characteristic of a corporation?

It is not a separate legal entity.

Who bears the risk of loss during shipment in a destination contract?

seller

Which of the following is NOT true about Section 10A of the Securities Exchange Act of 1934?

Once the auditor reports the illegal act to the board of directors, the board of directors must inform the Securities and Exchange Commission of the auditor's conclusion within seven business days.

Who below would NOT be a party to a life insurance contract?

any witnesses who sign the contract

Which of the following is NOT a criterion a corporation must meet in order to be taxed as an S corporation?

The corporation must have no more than 1,000 shareholders.

Which of the following is an INCORRECT statement regarding a life estate?

The person who is given a life estate is called the proprietor.

John's Equipment Rentals enters into a lease contract with ABC Construction for a backhoe to use in a yearlong excavation project. The backhoe is delivered to the construction site, but is a different size than that agreed to in the lease contract. During the night and before ABC can address the non-conformance, the backhoe is vandalized. Who bears the risk of loss for the damages?

John's Equipment Rentals, since the goods were non-conforming

Lars draws a check made "pay to the order of Yasmin Aslan." Yasmin signs the back of the check and cashes the check at the grocery store. Has the check been negotiated?

yes, Yasmin indorsed and delivered it

A _______ usually formulates zoning ordinances, conducts public hearings, and makes recommendations to the city council, which must vote to enact an ordinance.

zoning commission

Local laws that are adopted by municipalities and local governments to regulate land use within their boundaries are known as ________.

zoning ordinances

How many states recognize a form of co-ownership known as community property?

More than ________ countries have signed the Convention on Contracts for the International Sale of Goods (CISG).

________ is an agreement that requires selling shareholders to sell their shares to the other shareholders or to the corporation at the price specified in the agreement.

A buy-and-sell agreement

Which of the following is NOT true about a limited liability partnership (LLP)?

A certificate of limited liability partnership is a private document.

________ is issued by a land court that determines the rightful owner of real property.

A certificate of title

You and your twin brother decide to start a carpentry business called Bro & Bro Carpentry. Your business will be a private for-profit corporation whose shares are owned by a few shareholders who are family members, relatives, and friends. Bro & Bro Carpentry is which kind of corporation?

A closely held corporation

Gentris has just been hired by Greenwhite Corporation by the board of directors. Gentris's main duty will be to manage the day-to-day operations of the corporation. Greenwhite Corporation has hired Gentris as which of the following?

A corporate officer

Gillian works for a corporation. She was appointed by the board of directors, and she manages day-to-day operations of the corporation. Gillian is which of the following?

A corporate officer

Which of the following is an INCORRECT statement regarding incorporation procedure?

A corporation can be in incorporated in more than one state.

Which of the following statements about voluntary dissolution is NOT true?

A corporation cannot be voluntarily dissolved.

Which of the following is an INCORRECT statement regarding Delaware corporation law?

A corporation must do business in Delaware in order to obtain the benefits of Delaware corporation law.

Which of the following is an INCORRECT statement regarding corporate management?

A corporation usually has a decentralized management.

________ is a comprehensive insurance policy that includes coverage for the risks covered by a fire insurance policy as well as personal liability insurance.

A home owners' policy

Derivative action is best defined by which of the following?

A lawsuit a shareholder brings against an offending party on behalf of a corporation when the corporation fails to bring the lawsuit

Which of the following is an INCORRECT statement regarding members' and managers' duty of care to a limited liability company (LLC)?

A manager of a manager-managed LLC does not owe a fiduciary duty of loyalty to the LLC, since he or she is not a member.

Which of the following is NOT a topic covered by the Uniform Commercial Code (UCC)?

assault

The number of shares provided for in the articles of incorporation are called ________.

authorized shares

Which of the following is NOT a type of real property?

automobiles

What is a finance lease?

a three-party transaction consisting of a lessor, a lessee, and a supplier

Which of the following is an INCORRECT statement regarding members' and managers' duty of loyalty to a limited liability company (LLC)?

A manager of a manager-managed LLC does not owe a fiduciary duty of loyalty to the LLC, since he or she is not a member.

An LLC is formed by members John, Alicia, and Margaret. They designated the LLC as manager-managed and appoint Alicia and nonmember Robert as its managers. Who has the authority to bind the LLC to contracts?

Alicia and Robert, because they are the managers of the LLC

Sina is in a car accident while on business for Limo Lime, LLC. As a result of the accident, Tom is injured. If Sina were negligent in causing the accident, Tom can recover damages for his injury from ________.

both Sina and the LLC

Universal defenses can be raised against ________.

both holders in due course and holders

Which of the following is an INCORRECT statement regarding manager-managed LLCs?

All actions concerning the LLC can be delegated to managers.

Which of the following is NOT true about incontestability clauses?

An incontestability clause prevents insurers from contesting statements made by insureds in applications for insurance after the passage of a stipulated number of years (typically one year).

Which of the following is an INCORRECT statement regarding an insurable interest?

An insurable interest in another person's life must exist at the time of that person's death.

A corporation that does not qualify for or has not elected be taxed as an S corporation is a ________.

C corporation

________ is a form of ownership in which each spouse owns an equal one-half share of the income of both spouses and the assets acquired during the marriage.

Community property

_____ is a form of ownership in which each spouse owns an equal one-half share of the income of both spouses and the assets acquired during the marriage.

Community property

_____ insurance is a form of insurance that insures an automobile from loss or damage due to causes other than collision.

Comprehensive

_____ are the most financially dominant form of business organization in the United States, generating more than 85 percent of the country's gross business receipts.

Corporations

Which of the following is an INCORRECT statement regarding the corporation as a legal person?

Corporations are not separate legal persons.

The True Blue Corporation issues preferred stock that requires the payment of a quarterly dividend of $2.00 per share. The True Blue Corporation falls behind with six quarterly payments—$12.00 per share of preferred stock. The next quarter, the corporation makes a profit of $14.00 per share. The corporation must pay the $12.00 per share of arrearages to the preferred shareholders plus this quarter's payment of $2.00 per share. Thus, the common shareholders receive nothing. Which kind of preferred stock is the True Blue Corporation issuing?

Cumulative preferred stock

________ protects against losses caused to companies by cyberattacks as well as from liability for the losses suffered by their customers whose data has been stolen.

Cyber insurance

More than 50 percent of the publicly traded corporations in the United States are incorporated in ________.

Delaware

________ is insurance that protects directors and officers of a corporation from liability for actions taken on behalf of the corporation.

Directors' and officers' liability insurance (D&O insurance)

_____ insurance provides a monthly income to an insured who is disabled and cannot work.

Disability

________ is insurance that provides a monthly income to an insured who is disabled and cannot work.

Disability insurance

Which of the following is an INCORRECT statement regarding community property?

During the marriage, either spouse can sell, transfer, or make a gift of community property without the consent of the other spouse.

Which of the following is NOT true regarding the Uniform Commercial Code (UCC)?

Each state is required to adopt the UCC or most of the UCC.

_________ means relating to technology having electrical, digital, magnetic, wireless, optical, electromagnetic, or similar capabilities.

Electronic

__________ means a computer program or an electronic or other automated means used independently to initiate an action or respond to electronic records or performances in whole or in part, without review or action by an individual.

Electronic agent

________ are ownership rights in real property; the bundle of legal rights that the owner has to possess, use, and enjoy the property.

Estates in land (estate)

__________________ occurs when (1) a debtor transfers property to a third person within two year of the filing of a petition in bankruptcy, and (2) the transfer was made by the debtor with an intent to hinder, delay, or defraud creditors.

Fraudulent transfer

Which of the following is an INCORRECT statement regarding generally accepted accounting principles (GAAPs)?

GAAPs specify the methods and procedures that are to be used by public accountants when conducting external audits of company financial statements.

Which of the following is an INCORRECT statement regarding generally accepted auditing standards (GAASs)?

GAASs are standards for the preparation and presentation of financial statements.

Which of the following is NOT true about ownership in fee simple absolute (or fee simple)?

If a person owns real property in fee simple, that ownership may end on the occurrence of a future event.

Which of the following is an INCORRECT statement regarding promoters' liability and the corporation's liability on promoters' contracts?

If the corporation never comes into existence, the promoters have no liability on the contract.

Which of the following is NOT true about a limited liability partnership (LLP)?

In an LLP, all of the partners are personally liable for the debts and obligations of the LLP.

Which of the following is an INCORRECT statement regarding agency authority to bind an LLC to contracts?

In a manager-managed LLC, non-manager members can bind the LLC to contracts.

________ is(are) a means for persons and businesses to protect themselves against the risk of loss.

Insurance

An S corporation election is made by filing form 2553 with the ________.

Internal Revenue Service

Which of the following statements about standard fire insurance is true?

It can be expanded to cover damage from windstorms via a rider.

What of the following is NOT a feature of the Sarbanes-Oxley Act?

It prohibits employees of an accounting firm from ever becoming chief executive officer at one of their audit clients.

What is the importance of the Menendez v. O'Niell to corporations?

It reinforced the general rule that a corporation is a distinct legal entity, separate from the individuals who comprise it, and individual shareholders are not liable for the debts of the corporation.

Roberto purchases $1 million of life insurance and names his spouse, Jillian, the beneficiary. The policy contains the usual period for which a suicide clause is valid. Twenty months after purchasing the insurance, Roberto commits suicide. Which of the following is true?

Jillian may not recover the insurance proceeds because Roberto's suicide occurred within two years of the issuance of the life insurance policy.

To usurp a corporate opportunity means that a director or officer ________.

breached their duty of loyalty by stealing a corporate opportunity for themselves

Insurance that reimburses a business for loss of revenue incurred when the business has been damaged or destroyed by fire or some other peril is known as ____________ insurance.

business interruption

Which of the following statements is true regarding limited liability partnerships (LLP)?

The LLP is a domestic LLP in the state in which it is organized.

_____ is a rule stating that an accountant is liable only for negligence to third parties who are in privity of contract or in a privity-like relationship with the accountant.

The Ultramares doctrine

Which of the following is an INCORRECT statement regarding the Sarbanes-Oxley Act?

The act makes it possible for a registered public accounting firm to provide simultaneously audit and bookkeeping services to a public company.

Which of the following is an INCORRECT statement regarding an insurable interest?

Mortgagees do not have an insurable interest in property.

Which of the following is an INCORRECT statement regarding the parties to a life insurance contract?

Most life insurance contracts do not permit the owner of the policy to change beneficiaries.

________ is an automobile insurance system used by some states in which the driver's insurance company pays for any injuries or death the driver suffers in an accident, no matter who caused the accident.

No-fault insurance

________ are uses for real estate that buildings that already exist in a zoned area that are permitted to continue even though they do not fit within a new zoning use established for the area.

Nonconforming uses

Bingo, LLP enters into a contract to lease office space from a landlord for a five-year period. Two years later, the LLP fails and is unable to pay for the remaining three years' rent. The landlord sues both the LLP and the partners for breach of contract. Which of the following is true?

Only the assets of Bingo, LLC can be reached.

Which of the following is a doctrine that says if a shareholder dominates a corporation and uses it for improper purposes, a court of equity can disregard the corporate entity and hold the shareholder personally liable for the corporation's debts and obligations?

Piercing the corporate veil

Which of the following is NOT true about an audit committee?

The audit committee must register with the Public Company Accounting Oversight Board.

In a meeting with the creditors, which of the following is NOT true?

The bankruptcy judge must attend the meeting.

Hillary enters into a shipment contract with a dress manufacturer for fifty red dresses. The dress manufacturer sends fifty blue dresses. The dresses are damaged during shipment. Who bears the risk of loss and why?

The dress manufacturer, because the goods are non-conforming

_____ is a rule stating that an accountant is liable for negligence to third parties who are foreseeable users of the client's financial statements. It provides the broadest standard for holding accountants liable to third parties for negligence.

The foreseeability standard

Which of the following is an INCORRECT statement regarding additional terms in an acceptance?

Under the common law's reasonable facsimile rule, an offeree's acceptance may vary somewhat from the terms of the offer.

The International Chamber of Commerce has promulgated the ________, which establishes specific terms that are almost universally accepted and used to govern international letters of credit.

Uniform Customs and Practice for Documentary Credits (UCP)

Tereza works as the president of Yappy.com, a company that develops and sells smartphone apps and games. Charlie, an expert programmer and a gamer who does not work for Yappy.com, develops a productivity app called Check. Charlie takes his app to Tereza and offers the game to her as president of Yappy.com. Instead of bringing the opportunity to Yappy.com's board of directors, Tereza pays Charlie's asking price and purchases Check for herself. Tereza then leaves Yappy.com and forms her own company to distribute the Check app. Tereza has committed which of the following breaches of the duty of loyalty?

Usurping a corporate opportunity

________ is the process by which a dissolved corporation's assets are collected, liquidated, and distributed to creditors, preferred shareholders, and common shareholders.

Winding up and liquidation

Interested in a particular email offer, a buyer for a large company sends an acceptance letter to the seller of the goods. However, the post office loses the letter and the seller does not receive the acceptance. Is this still a valid contract?

Yes. The contract was created when the acceptance letter was sent.

_____ generally: 1) establish(es) land use districts within the municipality; 2) restrict(s) the height, size, and location of buildings on a building site; and 3) establish(es) aesthetic requirements or limitations for the exterior of buildings.

Zoning

A home owners' policy is ________.

a comprehensive insurance policy that includes coverage for the risks covered by a fire insurance policy as well as personal liability insurance

Bylaws are defined as ________.

a detailed set of rules adopted by the board of directors after a corporation is incorporated that contains provisions for managing the business and the affairs of the corporation

A dividend is ________.

a distribution of profits of the corporation to shareholders

A distribution of profits of the corporation to shareholders is called ________.

a dividend

A endorsement (rider) is ________.

a document that modifies an insurance policy and becomes part of the insurance policy

A duty that directors and officers have not to act adversely to the interests of the corporation and to subordinate their personal interests to those of the corporation and its shareholders is called ________.

a duty of loyalty

The duty of loyalty is ________.

a duty that directors and officers have not to act adversely to the interests of the corporation and to subordinate their personal interests to those of the corporation and its shareholders

A supramajority voting requirement means that ________.

a greater than majority of shares constitutes a quorum of the vote of the shareholders

Laurie and Steve own a small candy shop together, located on Main Street in Allentown, Pennsylvania. Their agreement spells out that should one of the parties die, that person's interest automatically passes to the surviving party. Laurie and Steve's agreement is best described as ________.

a joint tenancy

According to the video, what is the primary reason Carol E. Levy and Chris Lipman (her "ex-husband") are still living in the same home?

a judge ruled that they must share the marital home until it sells

A corporation has 30,000 shares outstanding. A shareholders' meeting is duly called to amend the articles of incorporation, and 16,050 shares are represented at the meeting. A quorum is present because ________.

a majority of the shares entitled to vote are represented

Insurance is ________.

a means for persons and businesses to protect themselves against the risk of loss

An inside director is ________.

a member of the board of directors who is also an officer of the corporation

Who is a good faith purchaser for value?

a person who pays sufficient consideration or rent for the goods to the person he or she honestly believes has good title to or leasehold interest in those goods

Who can transfer good title to a good faith purchaser for value?

a person with voidable title

From whom can an original owner reclaim his or her goods?

a person with who purchased stolen goods

What is an insurance contract called?

a policy

The money paid to the insurance company is called _____.

a premium

A nonprofit corporation is ________.

a private corporation that is formed for charitable, educational, religious, or scientific purposes, and other not-for-profit entities

If the parties to a sales contract do not set a specific time of performance for any obligation under the contract, the contract must be performed within _____.

a reasonable time

Nathan provides a life estate in property to his friend Eddie. When Eddie dies, the interest in the property will go to Scott. What sort of future interest does Scott hold?

a remainder

The board members of Bluegold corporation are meeting to discuss the possibility of the voluntary dissolution of the corporation. The idea for voluntary dissolution is put forward by a member of the board. The idea is seconded by another board member, and then put to the vote of the entire board of directors. The idea passes, and Bluegold corporation is voluntarily dissolved. The vote that authorized the dissolution is called ________.

a resolution

Nathan provides a life estate in property to his friend Eddie. When Eddie dies, the interest comes back to Nathan or Nathan's estate. What sort of future interest is present in this situation?

a reversion

The passing of title for real property from a seller to a buyer for a price is known as ________.

a sale

Adverse possession is ________.

a situation in which a person who wrongfully possesses someone else's real property obtains title to that property if certain statutory requirements are met

The board of directors of National Corporation is considering a merger with another corporation. In order to have the proposed merger approved, the board of directors would have to call for ________.

a special shareholders' meeting

Shannon owns 10,000 shares (10 percent) of the 100,000 outstanding shares of Greenwhite Corporation. If Greenwhite Corporation declares a dividend of 20 percent, Shannon will receive 2,000 shares. She now owns 12,000 shares—or 10 percent—of a total of 120,000 outstanding shares. Another name for the additional 2,000 shares Shannon received is ________.

a stock dividend

A requirement that a greater than majority of shares constitutes a quorum of the vote of the shareholders is called ________.

a supramajority voting requirement

Cumulative voting is ________.

a system in which a shareholder can accumulate all of his or her votes and vote them all for one candidate or split them among several candidates

Straight voting or noncumulative voting is ________.

a system in which each shareholder votes the number of shares he owns on candidates for each of the open positions

A fee simple defeasible (qualified fee) is best described as ________.

a type of ownership in real property that grants the owner all the incidents of a fee simple absolute except that ownership may be taken away if a specified condition occurs or does not occur

A fee simple absolute (fee simple) freehold estate is best described as ________.

a type of ownership of real property that grants the owner the fullest bundle of legal rights that a person can hold in property

A party who signs an instrument for the purpose of lending his or her name (and credit) to another party to the instrument is known as a(n)

accommodation party

Umbrella insurance is ________.

additional insurance that provides an insured coverage in excess of the basic policy limits of other insurance policies

Bob (a merchant) offers Jim (also a merchant) a sales contract. Jim accepts Bob's offer but adds additional terms to the contract. Under common law this would be considered a counteroffer; but under the UCC Jim's acceptance and addition of terms is still considered part of Bob's original offer. This is because of the___________ rule.

additional terms

Which type of opinion is usually issued when an auditor determines that a company has materially misstated certain items on its financial statements?

adverse

A(n) _____ opinion determines that the financial statements do not fairly represent the company's financial position, results of operations, or change in cash flows in conformity with generally accepted accounting principles.

adverse

A situation in which a person who wrongfully possesses someone else's real property obtains title to that property if certain statutory requirements are met is known as ________.

adverse possession

An electronic _____ is a computer program or an electronic or other automated means used independently to initiate an action or respond to electronic records or performances in whole or in part, without review or action by an individual.

agent

In order to amend the articles of organization for New Navy, LLC, ________.

all members must vote to amend the articles of organization

Marshall, Ted, and Susan contribute $1,000, $7,000 and $20,000 respectively to New Navy LLC. Which member will receive the greatest number of votes?

all of them will receive the same number of votes

An indorsement may also be written on a separate piece of paper called a(n) _______.

allonge

An ultra vires act is ________.

an act by a corporation that is beyond its express or implied powers

A buy-and-sell agreement is ________.

an agreement that requires selling shareholders to sell their shares to the other shareholders or to the corporation at the price specified in the agreement

A freehold estate is ________.

an estate in which the owner has a present possessory interest in the real property

A member of the board of directors who is also an officer of the corporation is called ________.

an inside director

Yijun and Zichu are both members of a limited liability company (LLC). The document that governs the relationship among the members and the company is known as ________.

an operating agreement

An easement by implication is an easement that is created when ________.

an owner subdivides a piece of property that has a well, path, or road on it that serves the entire parcel, and the purchasers of the subdivided pieces of property have an implied easement to use the well, path, or road

Which of the following is NOT covered by personal liability insurance?

any injuries the insured sustains off the property of the insured

Martin and Carl own properties that are adjacent to one another, and Carl's property abuts a public pond and grazing area for animals. For 35 years, Martin has crossed to the pond and grazing area via a path that cuts across the back of Carl's property. Martin's longtime use of the path across Carl's property has created an easement ________.

appurtenant

Brooke's next-door neighbor allows Brooke to run a driveway over his land. This sort of easement is known as an easement _____________.

appurtenant

Janae is a shareholder in Major Corporation. In order to pay for her wedding, Janae sells some of her shares. This scenario demonstrates that corporate shares ________.

are freely transferable

The articles of incorporation ________.

are the basic governing documents of a corporation

Jeryl's candy shop was damaged by a fire in the back room of the store that spread to the upper story of the building. While the store is repaired (and parts reconstructed), it will have to remain closed due to the smoke damage. The repairs are expected to take four months. Jeryl will be reimbursed for lost revenue during the four months his shop is closed by the ________ she purchased for the business.

business interruption insurance

While you are shopping at Trader Joe's, your car is hit in the parking lot and suffers damage to the passenger side doors. The damage caused to your car would be covered by ________.

collision insurance

The Uniform Commercial Code, a model law, governs contracts in all of the following situations EXCEPT?

commercial transactions involving the sale of services

The parties to a tenancy in common are called tenants in _____.

common

Cumulative preferred stock provides that any missed dividend payment must be paid in the future to the preferred shareholders before the _________ can receive any dividends. The amount of unpaid cumulative dividends is called __________.

common shareholders; dividend arrearages

Laura works for a small company that produces children's clothing. One day, while working in the stock room, she trips while carrying a load of heavy packages and injures her back. Workers' compensation insurance will ________.

compensate Laura for her medical care and lost wages

Property insurance that insures an automobile from loss or damage due to causes other than collision is known as ________ insurance.

comprehensive

Two or more persons may own a piece of real property. This is called _____ ownership.

concurrent

A situation in which two or more persons own a piece of real property is known as ________.

concurrent ownership

Miyu owns preferred stock in Major Corporation. She learns that the corporation's common stock has significantly increased in value. If Miyu owns convertible preferred stock she can ________.

convert her preferred shares into common stock

In college, you and fifteen of your friends pool your resources and buy a house. You create a corporation, then each friend buys shares in the corporation, and then you all sign lease agreements for different rooms in the house. You can't take out a loan based on the room that you own, but the corporation can borrow money on a blanket mortgage, in which case you would be jointly and severally liable on the loan. This type of co-ownership is best described as a ________.

cooperative

When a lessee purchases or leases substitute goods when a lessor fails to make delivery, it is known as _______.

cover

David cleans the gutters on his house each year. One day, while cleaning the gutters around the first story of his house, he slips and falls down onto the ladder, which breaks his fall but badly bruises his ribs. He goes to the emergency room, where his ribs are x-rayed and are examined by a doctor. David's health insurance will ________.

cover the costs of the x-rays and the doctor visit, less the deductible and coinsurance that David is responsible for

Suppose Dawn owns 1,500 shares of a corporation. Assume that two directors are to be elected to the board. Dawn can multiply the number of shares she owns (1,500) by the number of directors to be elected (two). She can cast all the resulting votes (3,000) for one candidate or split them among candidates as she determines. This means that, for the corporation in which Dawn owns shares, their articles of incorporation provide for ________ for the election of directors.

cumulative voting

Cyberattacks and cyber crimes have led to the development of _________ insurance for purchase by businesses.

cyber

If a customer's data is stolen electronically from a business, the business will file a claim against their _______.

cyber insurance policy

A merchant is one who ________________.

deals in the goods of the kind involved in a transaction, or has knowledge or skill peculiar to the goods involved in the transaction

A long-term unsecured debt instrument that is based on a corporation's general credit standing is called a ________.

debenture

A member of a limited liability company (LLC) is personally liable for ________.

debts and obligations of an LLC up to the amount of their capital contribution

Suppose that a company takes out a $1 million business interruption insurance policy. The insurance policy states that the insured is responsible for the first $10,000 of losses that it incurs. The $10,000 amount is considered the ________.

deductible

A(n) ________ is a clause in an insurance policy that provides that insurance proceeds are payable only after the insured has paid a specified amount toward the damage or loss.

deductible clause

An instrument that describes a person's ownership interest in a piece of real property is known as a ________.

deed

A sales or lease contract is made when the acceptance letter is _________.

delivered to the post office

Medical health insurance plans usually cover all of the following EXCEPT?

dental care

A lawsuit brought by a shareholder on behalf of a corporation against an offending party when the corporation fails to bring the lawsuit is called a(n) ________.

derivative action

As the journalist in this video notes, Martin Shkreli was convicted of securities fraud for using the funds from one hedge fund to pay off another. Suppose that the hedge fund's managers choose not to file a lawsuit against Shkreli to retrieve the stolen funds. In that case, the shareholders might choose to initiate a ________ to file a lawsuit on the hedge fund's behalf.

derivative action

Which of the following is NOT one of the methods to discharge a negotiable instrument?

destruction of the instrument by accident

In order to select a name for a new corporation, the organizer should ________.

determine whether the name is federally trademarked

In defrauding hedge funds, Martin Shkreli broke the duty of loyalty. In other words, he ________.

did not subordinate his personal interests to those of the corporation and its shareholders

The duty of care requires ________.

directors and officers to discharge their duties in good faith, with the care that an ordinary prudent person in a like position would use under similar circumstances, and in a manner they reasonably believe to be in the best interests of the corporation

There are three methods of _______________: (1) payment of the instrument, (2) cancellation, and (3) impairment of the right of recourse.

discharge

A(n) _____ of opinion expresses the auditor's inability to draw a conclusion about the accuracy of the company's financial records.

disclaimer

Which of the following is NOT a benefit of having a uniform commercial law across the states?

disparity

A _____ interest is a member's ownership interest in an LLC that entitles the member to receive distributions of money and property from the LLC.

distributional

The Ford Motor Company, a major manufacturer of automobiles and other vehicles, is incorporated in Delaware. It is a(n) _____ corporation in Delaware.

domestic

Darren and Carly are members of Cool Cars LLC. When deciding whether to engage in reckless conduct, they should consider their ________.

duty of care

Under the terms of your medical insurance, a hospital stay will be covered less a $500 deductible. After a recent bout of pneumonia that resulted in a two-day stay at the hospital, you receive a bill stating that the total cost of the stay is $7,860. The insurance company has a(n) ________ $7,360 to the hospital to cover the costs of your stay.

duty to pay

Community property is a form of ownership in which ________.

each spouse owns an equal one-half share of the income of both spouses and the assets acquired during the marriage

An ________ is an easement that is created when an owner subdivides a piece of property that has a well, path, or road on it that serves the entire parcel, and the purchasers of the subdivided pieces of property have an implied easement to use the well, path, or road.

easement by implication

According to the video, what is the primary reason divorcing couples choose to continue to cohabitate?

economic difficulties

A corporate officer is defined as an ________.

employee of a corporation who is appointed by the board of directors to manage the day-to-day operations of the corporation

A(n) ________ is a document that modifies an insurance policy and becomes part of the insurance policy.

endorsement (rider)

The terms of a(n) _____ are specified when an accountant and a client enter into a contract for the provisions of accounting services by the accountant.

engagement

Self-dealing is a breach of loyalty when a director or officer of a corporation ________.

engages in undisclosed self-dealing with their principal, the corporation

Midge, Inc. enters into a verbal agreement with Peggy, Inc. to purchase 100 pairs of scissors at a cost of $100.00. Later Midge contacts Peggy to increase the number of pairs of scissors to 550 for a price of $550. If Peggy only delivers 100 pairs of scissors to Midge, Peggy would be _____.

entitled to $100

A life estate may be measured by the life of a third party, which is called a(n) _____.

estate pur autre vie

Mario and Mary live next door to each other with a lot owned by Mario in between the two houses. Mario conveys this vacant lot to Mary for the duration of the life of Mary's husband Paolo. Mary owns a(n) _____ in a piece of real property. This means that Mary is treated as the owner of the property_____.

estate pur autre vie; during the duration of the life estate

Jet Purple airline decides it could use another airplane. Jet Purple contacts Ronald Trump and asks Ronald to purchase the airplane from Doh-ing Airplane Company who would deliver it to Jet Purple, then Jet Purple would pay Ronald for the right to use the airplane. This type of transaction is called a(n) ___________.

finance lease

The Uniform Commercial Code's _________ rule states that a merchant who makes an offer to buy, sell, or lease goods, and assures the other party in a separate writing that the offer will be held open, cannot revoke the offer for the time stated.

firm offer

A dividend preference is the right to receive a(n) _____ dividend at set periods during the year.

fixed

Goods that are affixed to real estate and thus become part of it are known as _____.

fixtures

Your aunt is selling her house in New Hampshire to move to a condominium in Florida. The house includes a number of storage spaces, such as built-in kitchen cabinets and shelving in many of the bedrooms. This cabinetry cannot be removed from the house without causing significant damage to the walls. The cabinets and shelving in your aunt's house are best described as ________.

fixtures

A life estate is an interest in real property ________.

for a person's lifetime

Quality Motor Company is incorporated in California. It conducts business in Oregon, where its headquarters are located, and it distributes vehicles in both California and Oregon, as well as all the other US states. In Oregon, Quality Motor Company would be considered a(n) ________ corporation

foreign

The Ford Motor Company, a major manufacturer of automobiles and other vehicles, is incorporated in Delaware. It distributes vehicles in Delaware, as well as the other 49 states. The Ford Motor Company is a(n) _____ corporation in the other 49 states.

foreign

Solis & Co., a national accounting firm, was hired to conduct an audit of Huntington Corp.'s financial statements. Solis & Co. negligently conducted the audit and failed to discover $1 million in false receivables that were based on fictitious sales and other suspicious activities. Solis & Co. rendered an unqualified opinion and provided 32 copies of the audited financial statements to Huntington Corp. Huntington gave one copy to Stemler State Bank, who then made a loan to Huntington based on the information in the audited statement. Solis & Co. was unaware that the statements would be provided to anyone outside of Huntington. When Huntington failed to repay the loan, Stemler State Bank brought a negligence action against Solis & Co. Under which theory of liability would Solis & Co. be liable to Stemler State Bank?

foreseeability standard

A cooperative is best described as a ________.

form of co-ownership of a multiple-dwelling building in which a corporation owns the building and the residents own shares in the corporation

A public corporation is ________.

formed to meet a specific governmental or political purpose

Marketable title (good title) is title to real property that is ________.

free from any encumbrances or other defects that are not disclosed but would affect the value of the property

A ________ is an estate in which the owner has a present possessory interest in the real property.

freehold estate

What business organization that is owned by two or members is taxed like an LLC?

general partnership

A ________ is a deed that protects a grantee of real property from defects in title caused by the grantor and prior owners of the property.

general warranty deed (grant deed)

Fixtures are best described as ________.

goods that are affixed to real estate and thus become part thereof

The ________ is the party to whom an interest in real property is transferred.

grantee

A publicly held corporation ________.

has many shareholders and its securities are traded on a national exchange

If a person owns real property in fee simple, their ownership _____.

has no limitation on inheritability

To qualify as a professional corporation, Medical Clinic, P.C., must meet all of the following qualifications EXCEPT?

have at least thirty-five shareholders

health insurance

If Nancy is a manager of a manager-managed limited liability company, and she is approached with opportunity to purchase a valuable asset for the company, Nancy must consider ________.

her duty of loyalty

To qualify as a(n) ____________________, a transferee must have taken the instrument for value, in good faith, and without notice that it is defective or overdue.

holder in due course

The alter ego doctrine applies ________.

if a shareholder dominates a corporation and uses it for improper purposes, a court of equity can disregard the corporate entity and hold the shareholder personally liable for the corporation's debts and obligations

A suicide clause in a life insurance contract provides that ________.

if an insured commits suicide before a stipulated date, the insurance company does not have to pay the life insurance proceeds

When does a lessor have a right to reclaim the goods?

if the lessor discovers that the lessee is insolvent

Nikhil and Rohan are two shareholders in a corporation. If they enter into a right of first refusal agreement they both agree that ________.

if they are to sell their shares, the selling shareholder must offer to sell his shares to the other party to the agreement before selling them to anyone else

A state's law prohibits the sale of marijuana. Jerry signs a promissory note promising to pay Gordon $500 for marijuana and Gordon negotiates this instrument to Matthew, a holder in due course. When Matthew presents this note to Jerry, Jerry can raise which of the following defenses?

illegality

A limited liability company can conduct business ________.

in any state

If a holder takes an instrument from a shady looking character in a dark alley, it could be inferred that the holder did not take the instrument ________.

in good faith

A corporation and a holder are signing an agreement to confirm the terms of a debt security. The holder reviews the contract carefully to make sure it contains the maturity date of the debt security, the required interest payment, the collateral (if any), rights to conversion into common or preferred stock, call provisions, any restrictions on the corporation's right to incur other indebtedness, and the rights of holders on default. This contract is called a(n) ________.

indenture agreement

A limited liability company has the same powers as a(n) ______________ to do all things necessary or convenient to carry on its business or affairs.

individual

A(n) _______________is the signature of a signer that is placed on the instrument to negotiation it to another person.

indorsement

Suppose Acme Inc. has a business interruption insurance policy from International Insurers. In this case, Acme Inc. is the ________ and International Insurers is the ________.

insured; underwriter

Incontestability clauses generally protect the position(s) of the ____________.

insureds

You are moving into your first apartment after graduating college and decide to take out renter's insurance so that your belongings can be protected in the event of some unfortunate circumstance in your apartment. Because you already have car insurance through Progressive, you take out a renter's insurance policy through the same company. In this arrangement, Progressive represents the ________.

insurer (underwriter)

Key-person life insurance is insurance that ________.

insures against the death of owners and other key executives and employees of a business

Comprehensive insurance is a form of property insurance that ________.

insures an automobile from loss or damage due to causes other than collision

Professional malpractice insurance (malpractice insurance) is insurance that ________.

insures professionals against liability for injuries caused by their negligence

Business _____ insurance reimburses a business for loss of revenue incurred when the business has been damaged or destroyed by fire or some other peril.

interruption

Scott is a corporate officer at Bluegold Corporation. Their articles of incorporation authorize the corporation to invest in real estate only. Scott breaches his duty of obedience if he ________.

invests corporate funds in the commodities markets

A(n) ________ is a person who has been expressly or impliedly invited to a landowner's or tenant's premises for the economic benefit of the owner or tenant.

invitee

The CEO and CFO certification ________.

is a certification required by the Sarbanes-Oxley Act that the chief executive officer (CEO) and chief financial officer (CFO) of a public company file with each annual and quarterly report of the company

A resolution of the board of directors ________.

is a vote taken by the board of directors of a corporation that authorizes certain actions to be taken on behalf of the corporation

The UCC defines a ___________ as a transfer of the right to the possession and use of named goods for a set term in return for certain consideration.

lease

Automobile _____ insurance covers damages that the insured causes to third parties, including both bodily injury and property damage.

liability

A(n) ________ is a person who is on someone's real property legally and with the express or implied permission of the landowner or tenant and is not there to convey an economic benefit to the landowner or tenant.

licensee

A ________ is an interest in real property for a person's lifetime; on that person's death, the interest is transferred to another party.

life estate

An interest in real property for a person's lifetime is known as a(n) _________.

life estate

Rebecca has three adult children and wants to make sure that they would not be unduly burdened by medical and funeral expenses at the time of her death, so she takes out an insurance policy. Rebecca's insurance policy is an example of ________.

life insurance

Members of an LLC have _____ liability for the debts, obligations, and liabilities of an LLC.

limited

An unincorporated business entity that combines the most favorable attributes of general partnerships, limited partnerships, and corporations is known as a ________.

limited liability company

Most public accounting firms are organized and operated as _____.

limited liability partnerships

Gentris has just been hired by Greenwhite Corporation's board of directors to be a corporate officer. Gentris' duties include ________.

management of the day-to-day operations of the corporation

If a general-purpose clause is included in the articles of incorporation the corporation ________.

may engage in any activity permitted by law

The owners of LLCs are usually called _____.

members

Under the UCC a(n) ____________ is a person who deals in the goods of the kind involved in a transaction, or by his or her occupation holds himself or herself out as having knowledge or skill peculiar to the goods involved in the transaction.

merchant

If Kiki buys a lot from Joey that is landlocked (meaning the purchased lot has no direct access to a road ), if Kiki can drive over Joey's lot to reach the nearest road, this is known as an easement by ________.

necessity

Jon is a corporate officer at SuperMassive Corporation. One of Jon's subordinate employees, Greg, is being investigated for embezzlement. Greg is eventually charged. It's then discovered that Jon failed to make a reasonable investigation of Greg's conduct and failed to attend board meetings on a regular basis. Jon is now personally liable for his breach of the duty of care. Jon's breach is called ________.

negligence

When a property already exists in a zoned area that does not fit within a new zoning use established for the area, it is known as a(n) ________.

nonconforming use

Managers of LLCs are _____ liable for the debts, obligations, and liabilities of the LLC they manage.

not personally

The fiduciary duty of loyalty includes the following duties EXCEPT?

not to engage in a known violation of the law

In a limited liability partnership, who is liable for the debts of the partnership?

only the limited partners up to their capital contribution

A(n) _____ is an agreement entered into among members that governs the affairs and business of the limited liability company (LLC) and the relations among members, managers, and the LLC.

operating agreement

Estates in land are ________.

ownership rights in real property; the bundle of legal rights that the owner has to possess, use, and enjoy the property

Which of the following would NOT support a court's application of the equitable doctrine of unconscionability in a UCC sales of lease contract case?

parties to the contract were sophisticated and/or had the ability to seek legal counsel regarding the contract

Legal Grounds Café LLC, a limited liability company owned by two members, may be taxed as a _________.

partnership

Under article 2 of the Uniform Commercial Code, what is a sale?

passing of title of goods from a seller to a buyer for a price

As the insurance expert in this video points out, insurance companies have to decide whether or not to compensate the insured for business interruption losses that resulted from the COVID-19 pandemic. In other words, the insurers are attempting to assess their duty to ________.

pay

Under the terms of your medical insurance, a hospital stay will be covered less a $500 deductible. After a recent bout of pneumonia that resulted in a two-day stay at the hospital, you receive a bill stating that the total cost of the stay is $7,860. Under its duty to pay, the insurance company must ________.

pay $7,360 to the hospital to cover the costs of your stay

Christopher is the owner of a company that makes meat thermometers. However, the thermometers are not very accurate, causing people who used them to get sick from improperly cooked meat. Several people sue Christopher's company in a class action lawsuit, and the company is found liable for monetary damages. In this case, Chris's product liability insurance would ________.

pay the judgment up to the policy limit of the insurance

To obtain property via adverse possession, all of the following are needed EXCEPT?

permission of the property owner

The owner of a car may choose to expand his or her automobile liability policy through all of the following EXCEPT?

personal articles floater

What is an addition to a home owners' policy that covers specific valuable items known as?

personal articles floater

Article 2(A) of the Uniform Commercial Code (UCC) applies to _____.

personal property leases

A(n) ________ is money paid to an insurance company.

premium

A recording statute is intended to ________.

prevent fraud and to establish certainty of ownership and transfer of property

An incontestability clause ________.

prevents insurers from contesting statements made by insureds in applications for insurance after the passage of a stipulated number of years

Makers of promissory notes and certificates of deposit have ____________ liability for the instruments.

primary

Professional corporations are ________.

private corporations formed by professionals such as lawyers, accountants, physicians, and dentists

product liability insurance

A person who organizes and starts a corporation is a ________.

promoter

A(n) _____ is a person who organizes and starts a corporation, negotiates and enters into contracts in advance of its formation, and finds the initial investors to finance the corporation.

promoter

Which of the following is NOT needed by an insurance company to create a personal articles floater?

proof of purchase of all items to be covered

A special warranty deed (limited warranty deed) is a deed that ________.

protects a grantee of real property from defects in title caused by the grantor

A general warranty deed (grant deed) is a deed that ________.

protects a grantee of real property from defects in title caused by the grantor and prior owners of the property

Cyber insurance ________.

protects against losses caused to companies by cyberattacks as well as from liability for the losses suffered by their customers whose data has been stolen

Directors' and officers' liability insurance (D&O insurance) is insurance that ________.

protects directors and officers of a corporation from liability for actions taken on behalf of the corporation

A corporation has 30,000 shares outstanding. A shareholders' meeting is duly called to amend the articles of incorporation, and 16,050 shares are represented at the meeting. A ________ is present because a majority of the shares entitled to vote are represented.

quorum

Which of the following is NOT a typical clause in an insurance policy?

ratification

Buildings constructed on land are ________.

real property

Land is the most common form of ________.

real property

Plant life and vegetation growing on the surface of land are considered ______.

real property

To void a transfer or an obligation, the court must find that (1) the transfer was made or the obligation was incurred by the debtor with the actual intent to hinder, delay, or defraud a creditor or (2) the debtor _____________________.

received less than a reasonable equivalent in value

Greenwhite Bank makes a loan to Joseph Stokes to purchase a house and takes back a mortgage. When Joseph's loan is taken out, Greenwhite Bank fails to record the mortgage in the country recorder's office, so when Joseph tries to borrow more money on the house from a national bank, no recorded mortgage is found. Greenwhite Bank should have filed the mortgage at the country recorder's office under the state's ________.

recording statute

The UCC defines a ___________ as the passing of title of goods from a seller to a buyer for a price.

sale

In a _______, there is no sale unless and until the buyer accepts the goods.

sale on approval

Modification of a contract typically requires additional consideration to be legally binding; however, in the case of a(n) __________ the UCC does not require any additional consideration for modification to be legally binding.

sales or lease contract

Jim Bob, Carlos, Carole, and Serena formed the Huntington Corporation, which opened a restaurant in December of 2019. Jim Bob, Carlos Carole, and Serena are all on the board of directors. Which of the following would NOT be an action taken at the first organizational meeting of the board?

selecting a state for incorporation

Brooke's next-door neighbor allows Brooke to run a driveway over his land. The grantor-neighbor's land is now a ______________ estate with regard to the easement.

servient

According to the video, the money that the major banks in the United States plan to distribute to shareholders will be in the form of _____.

share buybacks and dividend increases

A nonmanager member of a manager-managed limited liability company (LLC) is treated equally to a ________.

shareholder

Owners of a corporation who elect the board of directors and vote on fundamental changes in the corporation are called ________.

shareholders

Owners of a corporation who elect the board of directors are ________.

shareholders

Owners of corporations are called _____.

shareholders

Question Number 1) The subject of this video, Martin Shkreli, was once the CEO of Retrophin, a biotechnology firm. Shkreli received a huge amount of negative press for increasing that company's drug prices by as much as 2,000% percent. Despite the controversy, it can be argued that this price hike benefited ________.

shareholders

Theo and James were married on June 20, 2015, and they decided to make their home in Portland, Oregon, where they own a two-story home with an attached garage. If their documents of ownership indicate this is a tenancy by the entirety ________.

should either Theo or James die, their interest in the property will pass to the surviving party

Laurie and Steve own a small candy shop together, as a joint tenancy, located on Main Street in Allentown, Pennsylvania. Since this is a joint tenancy ________.

should one of the parties die, that person's interest automatically passes to the surviving party

A(n) ___________ on a negotiable instrument can be any symbol that is (1) handwritten, typed, printed, stamped, or made in almost any other manner and (2) executed or adopted by a party to authenticate a writing.

signature

Which of the following is NOT a form of co-ownership of real property?

sole proprietorship

A ________ is a deed that protects a grantee of real property from defects in title caused by the grantor.

special warranty deed (limited warranty deed)

Groups of laws that regulate the formation, operation and dissolution of a corporation are called ________.

state corporation codes

What remedies does a lessor have if the goods are in the possession of a common carrier and the lessee or lessee breaches the contract?

stopping goods in transit

A system in which each shareholder votes the number of shares he or she owns on candidates for each of the positions open is called ________.

straight voting (noncumulative voting)

The Tax Reform Act of 1976 imposes all EXCEPT which of the following penalties?

strict liability for the understatement of a client's tax obligation

A(n) ________ is a clause in a life insurance contract that provides that if an insured commits suicide before a stipulated date, the insurance company does not have to pay the life insurance proceeds.

suicide clause

You decide to purchase a parcel of land near Atwood, Michigan. When the purchase is completed and you own the land, you intend to begin construction of a new home for you and your family. Your rights to use, enjoy, and develop the land you own are called ________.

surface rights

A form of co-ownership of real property that can be used only by married couples is known as which of the following?

tenancy by the entirety

According to the textbook, _____ is a form of co-ownership of real property that can be used only by married couples.

tenancy by the entirety

Theo and James were married on June 20, 2015, and they decided to make their home in Portland, Oregon, where they own a two-story home with an attached garage. The documents of ownership clearly state that should either Theo or James die, their interest in the property will pass to the surviving party. Neither Theo nor James can sell his interest in the property without the other's consent. This form of co-ownership is best described as a ________.

tenancy by the entirety

A form of co-ownership in which the interest of a surviving tenant in common passes to the deceased tenant's estate and not to the co-tenants is known as ________.

tenancy in common

A reversion is a right of possession ________.

that returns to the grantor after the expiration of a limited or contingent estate

When submitting each annual and quarterly report, the CEO and chief financial officer (CFO) of a public company must file a statement. This statement certifies that the signing officer has reviewed the report; that, based on the officer's knowledge, the report does not contain any untrue statement of a material fact or omit to state a material fact that would make the statement misleading; and that the financial statement and disclosures fairly present, in all material aspects, the operation and financial condition of the company.

the CEO and CFO certification

Express powers of a corporation are granted by all of the following sources of law EXCEPT?

the Revised Model Business Corporation Act (RMBCA)

A federal statute that establishes rules to improve corporate governance, prevent fraud, and add transparency to corporate operations is called ________.

the Sarbanes-Oxley Act (SOX) of 2002

Which of the following is a major rule of liability that a state can adopt in determining whether an accountant is liable in negligence to third parties?

the Ultramares doctrine

According to the video, a notable concern regarding the major United States banks' $23 billion capital distribution plan is that _____.

the banks could fail again because they have less money on hand

Persons who are elected by the shareholders that make policy decisions concerning the operation of a corporation are called ________.

the board of directors

After conducting considerable research and investigation, the directors of a major automobile company, American Car Company, decide to produce a large volume of diesel cars. Four years later, when the diesel cars are introduced to the public for sale, few of them are sold because of the public's interest in buying electric and hybrid vehicles due to the increasing environmental damage of pollutants and an increase in gasoline prices. Because this was an honest mistake of judgment on the part of corporate management, American Car Company's judgment is shielded by ________.

the business judgment rule

Monthly benefits under disability insurance policies are usually based upon _________.

the degree of disability incurred by the insured

No-fault insurance is an automobile insurance system used by some states in which ________.

the driver's insurance company pays for any injuries or death the driver suffers in an accident, no matter who caused the accident

Subsurface rights (mineral rights) are rights to ________.Subsurface rights (mineral rights) are rights to ________.

the earth located beneath the surface of the land

For the incorporation process, ________ must be followed.

the state's corporation code

To prevail under the attractive nuisance doctrine, plaintiff must prove all of the following factors EXCEPT __________.

the utility of the defendant maintaining the condition and the burden of eliminating the danger were equal compared to the risk to children

A limited liability company can be liable for ________.

the wrongful act or omission of a member acting within the ordinary course of business

The chancery court in Delaware is an advantage for corporations because ________.

there are no juries

Who would NOT subject a limited liability partnership (LLP) to liability if they caused loss or injury to a third party while acting in the ordinary course of business for the LLP?

the LLP's landlord

A university student group contacts a printer to make 1,000 t-shirts in celebration of homecoming weekend. A design is provided to the printer and the price quoted to the student group is $3,000. The printer makes a mock-up t-shirt that is approved by the representatives of the student group. The printer is provided verbal authorization to complete the order by the representatives. When the shirts are completed, the printer requests payment. The student group, however, decides they do not need the shirts after all. The student group asserts that it does not have an enforceable contract as there is nothing in writing between the parties and the Statute of Frauds requires contracts for the sale of goods over $500 to be in writing. Which party will prevail and why?

the printer, because the t-shirts are specially made goods that cannot be resold and are completed

San Sebastian, Inc. is a company with retail stores throughout the United States. It enters into a sales contract with Hammock, a U.S. company, to purchase $35 million of hammocks. If the sales contract does not indicate the time, place, and manner of delivery of the goods, the place for delivery is _____.

the seller's place of business

After conducting considerable research and investigation, the directors of a major automobile company, American Car Company, decide to produce a large volume of diesel cars. Four years later, when the diesel cars are introduced to the public for sale, few of them are sold because of the public's interest in buying electric and hybrid vehicles due to the increasing environmental damage of pollutants and an increase in gasoline prices. The business judgement rule will shield the corporate management from liability because ________.

this was an honest mistake of judgment so corporate management did not breach their duty of care

According to the Uniform Commercial Code (UCC), the maximum amount of time permitted under the firm offer rule is _____.

three (3) months

Insurance that owners of real property purchase to ensure that they have clear title to the property is known as ________ insurance.

title

Legal tangible evidence of ownership of goods is called ________.

title

A special shareholders' meeting is called ________.

to consider and vote on important or emergency issues

A(n) ________ is a person who is on a landowner's or tenant's real property but has no invitation, permission, or legal right to be there.

trespasser

Which of the following is NOT one of the most common forms of life insurance?

triple indemnity

Parties to a life insurance contract include all EXCEPT which of the following?

trustee

The usual time period for which a suicide clause is valid is _____.

two years

An act by a corporation that is beyond its express or implied powers is called a(n) _____ act.

ultra vires

ABC Corporation's Board of Directors votes to award a corporate procurement contract to Company A. However, the CEO signs a corporate procurement contract with Company B, without corporate authority to do so. This is an example of a(n) ____________.

ultra vires act

Insureds who want to increase their liability coverage beyond the original coverage can purchase _____ insurance.

umbrella

Additional insurance that provides an insured coverage in excess of the basic policy limits of other insurance policies is known as ________.

umbrella insurance

An insurance company is also called the _____.

underwriter

Insurance is a contract whereby one party (the insurer or _____________) indemnifies another against the loss, damage, or liability that may arise from some event, distributing the risk of this loss between the parties to the contract.

underwriter

Under the UCC, only _____________ defenses can be asserted against a holder in due course.

universal

A(n) _____ opinion is the most favorable opinion an auditor can give.

unqualified

A(n) _____ opinion represents an auditor's finding that the company's financial statements fairly represent the company's financial position, the results of its operations, and the change in cash flows for the period under audit, in conformity with generally accepted accounting principles.

unqualified

Nonconforming uses are ________.

uses for real estate that buildings that already exist in a zoned area that are permitted to continue even though they do not fit within a new zoning use established for the area

An exception that permits a type of building or use in an area that would not otherwise be allowed by a zoning ordinance is known as a(n) ________.

variance

Jim Bob, Carlos, Carole, and Serena formed the Huntington Corporation, which opened a restaurant in December of 2019. Due to the pandemic and the state's order to close, in June of 2020 the Huntington Corporation filed articles of dissolution with the Secretary of State. This is known as a(n) _____, which required _____ vote by the shareholders

voluntary dissolution; a majority

When does the UCC apply to a mixed sale transaction?

when goods are the predominant part of the transaction

When does an umbrella policy make a pay out?

when primary policy limits on other insurance policies have been exceeded

workers' compensation insurance

Bob and Jim (both merchants) orally agree to a lease contract for some heavy equipment. Shortly thereafter, Jim sends Bob a written confirmation of the lease they agreed to. Bob ignores the written notice and fails to perform his obligations under the lease a month later. Bob argues they do not have a valid contract under the statute of frauds because he did not sign anything. Jim prevails in a lawsuit under what UCC rule?

written confirmation rule

If a member withdraws from a term limited liability company prior to the expiration of the term, this is considered ________.

wrongful disassociation

A famous architect wants to build a modern community center building made completely of stainless steel that rises six stories and incorporates sharp angles and an irregular shape, and approaches the zoning commission about building it in Old Town, an area filled with traditionally styled buildings from the 1800s. In following the city's ________, which require that the traditional aesthetics of Old Town be maintained, the city can deny the architect's building permit for the proposed community center.

zoning ordinances

Margaret, Jack, and Brooke form CPB Inc., and each contributes $10,000 capital. The corporation borrows $100,000 from Community Bank. One year later, CPB goes bankrupt and defaults on the loan owed to Community Bank. At that time, CPB's only asset is $15,000 cash, which Community Bank recovers. Under the shareholder limited liability rule, how much will each of these shareholders have to pay Community Bank?

Sarah gets into an automobile accident and her car suffers $5,000 of damage. She has automobile insurance for $10,000 dollars with a $1,000 dollar deductible. How much does Sarah have to pay to get her car fixed?

$1,000

Victims of a securities fraud perpetrated by a firm suffer $1 million in damages. The accountants for the firm are found to be 10 percent liable, although they did not knowingly participate in the fraud. What amount, if any, would the accountants owe to the plaintiffs?

$100,000; accountants are liable to their proportionate degree of fault

Assume that Jason files a petition for chapter 7 liquidation bankruptcy. He owns a principal residence worth $600,000 that is subject to a $400,000 mortgage and the trustee sells the home for $600,000. How much money can Jason keep from the sale if the federal homestead exemption is applied?

$22,975

The bankruptcy court will confirm a plan of reorganization under the acceptance method if ________.

(1) the plan is in the best interests of the creditors because the creditors would receive at least what they would receive in a Chapter 7 liquidation bankruptcy, (2) the plan is feasible, and (3) each class of creditors accepts the plan

Section _____ of the _____ prohibits any manipulative or deceptive practice in connection with the purchase or sale of any security.

10(b); Securities Exchange Act of 1934

Section _____ of the _____ imposes civil liability on accountants and others for 1) making misstatements or omissions of material facts in a registration statement or 2) failing to find such misstatements or omissions.

11(a); Securities Act of 1933

Section _____ of the _____ imposes civil liability on any person who makes false or misleading statements of material fact in any application, report, or document filed with the SEC.

18(a); Securities Exchange Act of 1934

In 2013, Target Corporation, the third-largest retailer in the United States, was subject to a cyberattack when hackers breached Target's firewalls and obtained information on more than _________ million credit and debit cards used by Target customers. Target had cyber insurance that covered about _________ of the company's liability caused by the security breach.

40; two-thirds

Jim Bob, Carlos, Carole, and Serena formed the Huntington Corporation, which opened a restaurant in December of 2019. Although the corporate bylaws expressly prohibit the use of the leased space for anything other than a restaurant, the pandemic in early 2020 forced the closing of the restaurant and Jim Bob leased the space to a pet store. Which of the following is true?

Carlos, Carole, and/or Serena could bring a lawsuit against Jim Bob for engaging in an ultra vires act.

________ insurance is insurance that protects directors and officers from liability for decisions and actions they take on behalf of the corporation.

Directors' and officers'

Certified public accountants must comply with two uniform standards of professional conduct: _____ and _____.

GAAPs; GAASs

Which of the following is an INCORRECT statement regarding corporate shareholders?

Generally, shareholders have unlimited liability for corporate debts.

Which of the following is an INCORRECT statement regarding corporate bylaws?

Incorporators, not the initial directors, may adopt the bylaws of the corporation.

Four accountants, Jim Bob, Carlos, Carole, and Serena form a limited liability partnership (LLP), JCCS, LLP, to provide auditing services. JCCS, LLP is organized in the State of Texas. After several years of business, the firm opens an office in Oklahoma. Which of the following is true?

JCCS, LLP is a domestic LLP in Texas and must register as a foreign LLP in Oklahoma.

Margaret owns a house that burned down. Who does NOT have insurable interest in the house? A. the bank who holds the mortgage on the house B. the person renting the house C. Margaret's mother, to whom Margaret owes money D. Margaret E. the contractor who has a lien on the house

Margaret's mother, to whom Margaret owes money

Jessica's daughter, Anya, has a sleepover at her house with five girls from school. During the night a fire breaks out and Anya's friend Amy is injured. Which type of insurance policy or clause will cover Amy's injuries?

homeowner's policy

A debenture is a _________ debt instrument that is __________.

long-term, unsecured; based on a corporation's general credit standing

In a ___________ managed limited liability company (LLC), the managers have the authority to bind the LLC to contracts.

manager-

An LLC can be either a(n) _____-managed LLC or a(n) _____-managed LLC.

member; manager

Under a system of _____ automobile insurance, a driver's insurance company pays for any injuries or death he or she suffered in an accident, no matter who caused the accident.

no-fault

The term electronic _____ recognizes that UCC contracts and other information may be sent or stored by electronic means rather than in _____ writings.

record; tangible

In a noncarrier case, if a sales or lease contract does not expressly state the place of delivery, where will the buyer or lessee pick up the goods?

seller's place of business

A note is a _________ security with a maturity of 5 years or less. Notes can be __________.

short-term, debt; either secured or unsecured

Suppose JetGreen Airways, a commercial air carrier, decides to lease a new airplane that is manufactured by Boeing. To finance the airplane acquisition, JetGreen goes to City Bank. City Bank purchases the airplane from Boeing, and City Bank then leases the airplane to JetGreen. Boeing is the _____, City Bank is the _____, and JetGreen is the _____.

supplier; lessor; lessee

A corporation with more than 100 shareholders would automatically be considered a(n) ________.

C corporation

Maureen is a fire fighter in Pullman, Washington. While carrying a child out of a burning building, Maureen injures her back and can no longer work. What type of insurance will provide her with a monthly income? Who usually pays the premium?

disability; both employer and employee

According to the video, major banks in the United States are ready to distribute _____ as __________ to investors after the banks pass the Federal Reserve's "_____ test."

$23 billion; dividends; stress

An LLC is a(n) _____ LLC unless it is designated as a(n) _____ LLC.

at-will; term

Shannon owns 10,000 shares (10 percent) of the 100,000 outstanding shares of Greenwhite Corporation. If the Greenwhite Corporation board of directors declares a stock dividend of 20% she will receive ________.

2,000 additional shares

A bond is a _________ security that is __________.

long-term, debt; secured by some form of collateral

Which of the following is NOT true about holding companies?

Many holding companies are S corporations.

Which of the following is an INCORRECT statement regarding marine insurance?

Marine insurers do not distinguish between inland marine insurance and ocean marine insurance, since both involve water-related perils.

The _____ is a model act that provides comprehensive and uniform laws for the formation, operation, and dissolution of LLCs.

ULLCA

The articles of incorporation are also referred to as the corporate _____.

charter

A(n) _____ clause requires an insured to pay part of the cost of an insured loss.

coinsurance

An owner of an automobile may purchase _____ insurance that insures his or her car against risk of loss or damage. This form of property insurance pays for damage caused if the car is struck by another car.

collision

Insurance that insures one's car against risk of loss or damage caused by another car hitting it is known as ________ insurance.

collision

Which of the following is NOT covered by comprehensive insurance?

collision

Which of the following is NOT a way ownership of real property can be transferred from one person to another?

revocation

The interviewee in this video, Finley Harckham, suggests that businesses should check their policies closely the next time those policies are renewed, because the insurer may include a new ________ that excludes paying damages for losses created by a pandemic.

rider

Which of the following is NOT a possible preference held by preferred stockholders?

right to authorize new shares

Preemptive rights are ________.

rights that give existing shareholders of a corporation the option to purchase new shares issued by the corporation in proportion to their current ownership interests

________is title to real property that is free from any encumbrances or other defects that are not disclosed but would affect the value of the property.

Marketable title

________ is title to real property that is free from any encumbrances or other defects that are not disclosed but would affect the value of the property.

Marketable title (good title)

According to the video, the Federal Reserve's "stress test" is designed to ensure banks have enough capital on hand to withstand a _____ percent unemployment rate, a _____ percent decline in home prices, and a _____ percent decline in the stock market.

10; 25; 60

New York, the location of the home referenced in the video, is one of approximately ______ states that currently recognize tenancy by the entirety.

During Martin Shkreli's tenure as CEO of the biotechnology firm Retrophin, the price of one of the company's drugs, Thiola, increased from $1.50 to $30 per pill. Suppose that Retrophin's bylaws had a supramajority voting requirement indicating that increased drug prices must be approved by 75% of the voting shares. If the company had 400,000 shares outstanding, then the company would require a "Yes" vote from ________ shares to raise the price.

300000

Which of the following is NOT true about the Racketeer Influenced and Corrupt Organizations Act (RICO)?

Accountants cannot be named as defendants in lawsuits that assert violations of RICO.

You would like to start a new company that provides tutoring services in English for students who speak multiple languages. Which of the following types of corporations would be the best fit for your company?

A nonprofit corporation

In which of the following scenarios would a limited liability partnership (LLP) be liable for the tortious conduct of the partner?

A partner is on their way to deposit the LLP's monthly receipts at its bank and negligently causes an automobile accident that injures another person.

Which of the following statements about a personal articles floater is NOT true?

A personal articles floater does not provide coverage for loss or damage to the articles while traveling.

Ashley is starting a new corporation called Stars, Inc. on behalf of her client. Ashley is organizing the corporation and starting the corporation herself. She's also working to find investors to finance the corporation. Ashley is which of the following?

A promoter

Which of the following is true about sales or lease contract enforceabilty?

A sales contract for specially manufactured goods does not need to be in writing in order to be enforceable.

________ is a form of co-ownership in which the interest of a surviving tenant in common passes to the deceased tenant's estate and not to the co-tenants.

A tenancy in common

Which of the following is NOT true regarding the management of an LLC?

All actions in a manager-managed LLC must be delegated to the managers.

Which of the following is NOT true about the Uniform Limited Liability Company Act (ULLCA)?

All states have adopted the ULLCA as law.

Which of the following is an INCORRECT statement regarding the management of an LLC?

An LLC must be managed by designated management, not by its members.

Which of the following is NOT true about the limited liability of a limited liability partnership (LLP)?

An LLP must have at least one general partner who is personally liable for the debts and obligations of the LLP.

________ is a chronological history of the chain of title affecting the property, including recorded documents and public records relating prior ownership of the property.

An abstract of title

Which of the following is NOT true regarding accounting malpractice (negligence)?

An accountant is relieved of liability if he or she can prove they followed applicable GAAP, GAAS, and/or IFRS.

Which of the following is true about how a sales/lease contract may be accepted?

An offer may be accepted when sent in any reasonable manner if no specific manner is indicated.

What section of the UCC governs sales contracts?

Article 2

What article of the UCC governs the formation of leases?

Article 2A

If not otherwise specified, domestic letters of credit are usually governed by________.

Article 5 of the Uniform Commercial Code (UCC)

________ must be filed at the secretary of state's office of the state of organization of a limited liability company (LLC) to form the LLC.

Articles of organization

Which of the following is an INCORRECT statement regarding a sale of goods?

Article 2(A) of the Uniform Commercial Code (UCC) applies to sales contracts for the sale of goods.

The 2005 act requires a(n) ___________ whereby an attorney who represents a client in bankruptcy must certify the accuracy of the information contained in the bankruptcy petition and the schedules, under penalty of perjury.

Attorney Certification

_____ can be defined as a verification of a company's books and records.

Audit

Which of the following is an INCORRECT statement regarding capital contributions to a limited liability company (LLC)?

A member's capital contribution to an LLC may not be in the form of services.

Which of the following is an INCORRECT statement regarding a distributional interest in an LLC?

A member's distributional interest in an LLC must be transferred in whole.

Which of the following is an INCORRECT statement regarding capital contributions to an LLC?

A member's obligation to contribute capital is excused by the member's death.

According to the video, which bank received only a "conditional pass" in terms of the Federal Reserve's "stress test?"

Bank of America

Four accountants, Jim Bob, Carlos, Carole, and Serena form a limited liability partnership (LLP) to provide auditing services. While performing an audit on a small business, Jim Bob is negligent, resulting in a $1 million judgment against the business. Which of the following is true?

Both Jim Bob and the LLP are liable, but not Carlos, Carole, or Serena.

Jim Bob, Carlos, Carole, and Serena formed the Huntington Corporation, which opened a restaurant in December of 2019. Each of the shareholders contributed $200,000 in capital. Huntington Corporation borrowed $1 million from its local bank. Due to the pandemic and the state's order to close, in June of 2020 the Huntington Corporation filed for bankruptcy. Huntington's only assets were $100,000, which the bank recovered, leaving a remaining debt of $900,000 Which of the following is true?

Jim Bob, Carlos, Carole, and Serena are not liable for the $900,000 owed to the bank.

Jon is a corporate officer at SuperMassive Corporation. One of Jon's subordinate employees, Greg, is being investigated for embezzlement. Greg is eventually charged. Jon has been negligent, breaching his duty of care, if ________.

Jon failed to make a reasonable investigation of Greg's conduct and failed to attend board meetings on a regular basis

________ is life insurance purchased and paid for by a business that insures against the death of owners and other key executives and employees of the business.

Key-person life insurance

A(n) _____ is an unincorporated business entity that combines the most favorable attributes of general partnerships, limited partnerships, and corporations.

LLC

Which of the following is an INCORRECT statement regarding limited liability companies (LLCs)?

LLCs are creatures of federal statue.

The Roja Corporation has 100,000 outstanding shares, and RJ owns 10,000 shares (10 percent). Roja plans to raise more capital by issuing another 100,000 shares of stock. RJ must be offered the option to purchase 10,000 of the 100,000 new shares before they are offered to the public. If he does not purchase them, and all of the shares are sold, his ownership in the corporation will be diluted from 10 percent to 5 percent. RJ must be offered the option to purchase a percentage of the new shares under which of the following?

Preemptive rights

_____ stock is a type of equity security that is given certain preferences and rights over common stock.

Preferred

Which of the following is an INCORRECT statement regarding preferred stock?

Preferred stockholders have unlimited liability for corporate debts and other obligations.

Which of the following is NOT true about title insurance?

Prior title insurance policies can be transferred over to new buyers.

________ is insurance that insures professionals against liability for injuries caused by their negligence.

Professional malpractice insurance (malpractice insurance)

You are moving into your first apartment after graduating college and decide to take out renter's insurance so that your belongings can be protected in the event of some unfortunate circumstance in your apartment. Because you already have car insurance through Progressive, you take out a renter's insurance policy through the same company. Who is the insurer or underwriter in this scenario?

Progressive

_____ property is immovable or attached to immovable land or buildings.

Real

________ is the land itself as well as buildings, trees, soil, minerals, timber, plants, and other items permanently affixed to the land.

Real property

________ is the land itself as well as buildings, trees, soil, minerals, timber, plants, and other items permanently affixed to the land.

Real property

_________ of the UCC contain(s) provisions that recognize the importance of electronic contracting in sales and lease transactions.

Revised Article 2 (Sales) and Revised Article 2A (Leases)

Solis & Co., a national accounting firm, was hired to conduct an audit of Huntington Corp.'s financial statements in order for them to secure a bank loan. Solis & Co. negligently conducted the audit and failed to discover $1 million in false receivables that were based on fictitious sales and other suspicious activities. Solis & Co. rendered an unqualified opinion and provided 32 copies of the audited financial statements to Huntington Corp. Huntington gave one copy to Stemler State Bank, who then made a loan to Huntington based on the information in the audited statement. Solis & Co. was unaware of which bank Huntington intended to use. When Huntington failed to repay the loan, Stemler State Bank brought a negligence action against Solis & Co. Under which theory of liability would Solis & Co. be liable to Stemler State Bank?

Section 552 of the Restatement (Second) of Torts

The majority of states have adopted which rule of liability in determining whether an accountant is liable in negligence to third parties?

Section 552 of the Restatement (Second) of Torts

Which of the following is a major rule of liability that a state can adopt in determining whether an accountant is liable in negligence to third parties?

Section 552 of the Restatement (Second) of Torts

_____ is a rule stating that an accountant is liable only for negligence to third parties who are members of a limited class of intended users of the client's financial statements.

Section 552 of the Restatement (Second) of Torts

Mark works for Ericsson Corporation, a corporation that has superstores that sell a wide range and large inventory of home goods. Mark's job is to locate future sites for Ericsson stores. Mark finds a piece of real estate that would make a great site for an Ericsson store. Mark tells his friend Joel to purchase the property from its current owner, which Joel does. Mark makes a secret agreement with Joel to split the profits when Joel sells the property to Ericsson. Without disclosing his interest in the property, Mark recommends the site to Ericsson, which then purchases the property from Joel. Joel then splits the profits with Peter. This is an example of which of the following breaches of the duty of loyalty?

Self-dealing

Ashley is starting a new corporation called Stars, Inc. on behalf of her client. If Ashley is serving in the capacity of promoter, what sort of acts does she perform?

She is organizing the corporation, negotiating contracts, and helping to locate investors to finance the corporation.

Shelly is liable for negligence because Sandy would be considered a licensee.

An owner of a house, Shelly, invites a friend, Sandy, over for dinner. Shelly leaves a bright orange garden hose across the walkway to the house. The walkway is very well lit, and the bright orange hose can be easily seen while walking up the walkway. Sandy trips on the garden house and is injured. Which of the following is true?

Shelly is not liable for negligence because Sandy should have noticed the open and obvious danger.

An owner of a house, Shelly, invites a friend, Sandy, over for dinner. Shelly leaves a garden hose across the walkway to the house. The walkway is not well lit, and the danger is not obvious. While having dinner, Shelly and Sandy hear a loud noise outside. One of Shelly's neighbors, Vinny, was cutting through her yard even though she had previously told him not to use her property as a shortcut. Vinny was injured when he tripped on the garden house. Which of the following is true?

Shelly is not liable for negligence because Vinny would be considered a trespasser.

Which of the following is true about accountant-client privilege?

Sometimes clients of accountants are sued in court.

Congress enacted the _________________ to allow the shareholders of some corporations to avoid double taxation.

Subchapter S Revision Act

________ are rights to the earth located beneath the surface of the land.

Subsurface rights (mineral rights)

Which of the following is an INCORRECT statement regarding subsurface rights?

Subsurface rights are also referred to as intangible rights.

_____ is a form of co-ownership of real property that can be used only by married couples.

Tenancy by the entirety

According to the textbook, which of the following is a correct statement regarding tenancy by the entirety?

Tenancy by the entirety must be created by express words.

Which of the following is an INCORRECT statement regarding an insurable interest?

Tenants do not have an insurable interest in property.

All of the following are examples of transfer warranties made by any person who transfers a negotiable instrument for consideration, EXCEPT?

That there are no defenses of any party that are good against the transferee.

Which of the following statements about automobile liability insurance is NOT true?

The minimum legal required liability insurance is usually quite high (e.g., $500,000).

When a nonnegotiable contract is transferred by assignment, which of the following is NOT true?

The nonnegotiable contract is converted into a negotiable instrument and is subsequently subject to Article 3 of the UCC.

Which of the following statements about presentment warranties is true?

The person who presents a draft or check warrants that he has good title.

Which of the following is NOT true about adverse possession?

The possessor must occupy the property with the express or implied permission of the owner.

Which of the following is an INCORRECT statement regarding the registered office or registered agent of a corporation?

The registered office must be the same as the corporation's place of business.

Nikhil and Rohan are two shareholders in a corporation. They enter into an agreement whereby they both agree that, if they are to sell their shares, the selling shareholder must offer to sell his shares to the other party to the agreement before selling them to anyone else. What is Nikhil and Rohan's agreement called?

The right of first refusal

Which of the following is a correct statement regarding the definition of goods according to the Uniform Commercial Code (UCC)?

The unborn young of animals meet the UCC definition of goods.

Which of the following statements is false regarding forged indorsements?

There are no exceptions to the general rule that the loss falls on the party who first takes the forged instrument after the forgery.

What is the limited liability of shareholders?

They are only liable to the extent of their capital contributions to the corporation.

Massive Corporation, a new company, is working on its articles of incorporation. One of the things included in the articles of incorporation is a provision regarding authorized shares. What are authorized shares?

They are the total amount of shares the corporation is authorized to issue.

Which of the following statements about key-person life insurance is NOT true?

The key-person pays the premiums for the key-person life insurance policies.

________ is bought by purchasers of real estate to ensure that they will be paid for losses suffered by defects in the title to the property that occurred prior to the purchase or loan.

Title insurance

Which is the following statements about title insurance is NOT true?

Title insurance protects against defects in titles and liens or encumbrances that are disclosed on the title insurance policy.

Solis & Co., a national accounting firm, was hired to conduct an audit of Huntington Corp.'s financial statements in order for them to secure a bank loan with Stemler State Bank. Solis & Co. negligently conducted the audit and failed to discover $1 million in false receivables that were based on fictitious sales and other suspicious activities. Solis & Co. rendered an unqualified opinion and provided 32 copies of the audited financial statements to Huntington Corp. Huntington gave one copy to Stemler State Bank, who then made a loan to Huntington based on the information in the audited statement. When Huntington failed to repay the loan, Stemler State Bank brought a negligence action against Solis & Co. Under which theory of liability would Solis & Co. be liable to Stemler State Bank?

Ultramares doctrine

Which of the follows correctly ranks the major rules of liability (Ultramares, Section 552, foreseeability standard) in order from least broad to broadest standard for holding accountants liable to third parties for negligence?

Ultramares, Section 552, foreseeability standard

________ insurance is additional insurance that provides coverage in excess of the basic policy limits of other insurance policies.

Umbrella

Which of the following is NOT true about a member's dissociation from a limited liability company (LLC)?

Under no circumstances can a member withdraw from a term LLC.

Which of the following is an INCORRECT statement regarding the taxation of limited liability companies (LLCs)?

Under the Internal Revenue Code, for federal income tax purposes, an LLC is taxed as a corporation unless it elects to be taxed as a partnership.

Who bears the risk of loss when the goods are stolen and resold?

buyer

As a general rule, members of an LLC are not personally liable to third persons for the debts, obligations, and liabilities of an LLC beyond their _____.

capital contribution

Accumulated Capital Corporation and Business Funds, Inc., form a corporation. The ownership of the corporation is represented by ________.

certificates of stock

Craig purchases fire insurance for his home, as he lives in an area where forest fires cause damage to homes each year. Months into his policy, he begins a small painting business and starts storing large quantities of paint and paint removers in his garage. He does not update his policy to reflect this. Two months later, a fire starts in his garage, destroying the garage and causing significant smoke damage to his home. The insurance company refuses to pay his claim. The insurance company had a(n) ________ in the contract stipulating that damage resulting from a fire caused by the storage of flammable liquids would not be covered by the policy unless the insured paid an additional premium for that coverage.

exclusions from coverage clause

Jim Bob, Carlos, Carole, and Serena formed the Huntington Corporation, which opened a restaurant in December of 2019. Due to the pandemic and the state's order to close, in June of 2020, the Huntington Corporation filed articles of dissolution with the Secretary of State. Which of the following would be paid first?

expenses of liquidation

In the context of a limited liability partnership (LLP), a continuation agreement ________.

expressly sets forth the events that allow for extension of the limited liability partnership upon dissociation and dissolution

The findings of the court in the Martin Shkreli case make it clear that Shkreli ________.

failed in the duty of loyalty

The Sarbanes-Oxley Act (SOX) of 2002 is a ________.

federal statute that establishes rules to improve corporate governance, prevent fraud, and add transparency to corporate operations

A type of ownership of real property that grants the owner the fullest bundle of legal rights that a person can hold in real property is known as a(n) ________.

fee simple absolute

Mary owns a _____ in a piece of real property. This means that there are no limitations on her ownership rights. Mary owns this property while she is alive, with no conditions on her ownership rights, and she can transfer the property by will to a named beneficiary or beneficiaries when she dies.

fee simple absolute

Charles owns a piece of land on which he has constructed a house. There are no limitations on his ownership rights, and he owns this property for the duration of his lifetime. Charles can transfer the property by will to a named beneficiary or beneficiaries when he passes away.

fee simple absolute (fee simple)

A type of ownership of real property that grants the owner all the incidents of a fee simple absolute except that it may be taken away if a specified condition occurs or does not occur is known as ________.

fee simple defeasible

Penelope Stevenson is a wealthy woman who owns many properties in the "old town" area of the town where she lives. A lifelong lover of books, she decides to give one of her properties to the local library foundation for "as long as the property is used as a library." The ownership rights of the library foundation are best described as ________.

fee simple defeasible (qualified fee)

Disability insurance ________.

provides a monthly income to an insured who is disabled and cannot work

A deductible clause ________.

provides that insurance proceeds are payable only after the insured has paid a specified amount toward the damage or loss

A professional who is not a certified public accountant is generally referred to as a(n) _____ accountant.

public

Google, Inc. is an example of a ________________ corporation.

publicly held

A corporation that has many shareholders and whose securities are often traded on national stock exchanges is called a ________.

publicly held corporation

Which of the following is NOT a measure of damages for a buyer when the seller fails to deliver the goods or repudiates the contract?

punitive damages

A(n) _____ opinion states that the financial statements are fairly represented except for, or subject to, a departure from generally accepted accounting principles, a change in accounting principles, or a material uncertainty.

qualified

Mario and Mary live next door to each other with a lot owned by Mario in between the two houses. Mario conveys this vacant lot to Mary provided she never builds on it. Mary owns a _____ in the vacant lot. This means that Mary _____.

qualified fee; has all the rights of a fee simple absolute owner except that her ownership rights would be terminated if she tries to build on it

A(n) _____ deed is a deed in which the grantor transfers only whatever interest they have in the real property.

quitclaim

Cindy decides to gift her brother, Bob, with a small cottage that she owns on a piece of property adjacent to her main summer home. To transfer her interest in the house to Bob, Cindy signs a ________.

quitclaim deed

Craig purchases fire insurance for his home, as he lives in an area where forest fires cause damage to homes each year. Months into his policy, he begins a small painting business and starts storing large quantities of paint and paint removers in his garage. He does not update his policy to reflect this. Two months later, a fire starts in his garage, destroying the garage and causing significant smoke damage to his home. The insurance company had an exclusions from coverage clause in the contract stipulating that damage resulting from a fire caused by the storage of flammable liquids would not be covered by the policy unless the insured paid an additional premium. The insurance company will ________.

refuse to pay his claim

Zoning ordinances ________.

regulate land use by establishing land use districts within municipalities, making restrictions on the height, size, and location of buildings on building sites, and establishing aesthetic requirements for the exterior of buildings

reimburse for lost revenue during the four months her shop is closed

This video makes many references to business interruption insurance. This type of insurance ________.

reimburses businesses for any revenues lost when a business is severely damaged or destroyed by fire or some other peril

If the right of possession returns to a third party on the expiration of a limited or contingent estate, it is called a _____.

remainder

replacement cost insurance

Common stock is a type of equity security that represents the _____ value of a corporation.

residual

Common stock represents the ________.

residual value of a corporation

If Anastasia indorsed her check by writing "for deposit only" above her signature, what type of indorsement would be created?

restrictive

A ________ is a right of possession that returns to the grantor after the expiration of a limited or contingent estate.

reversion

A _____ is a right of possession that returns to the grantor after the expiration of a limited or contingent estate.

reversion

Which of the following is a major rule of liability that a state can adopt in determining whether an accountant is liable in negligence to third parties?

the foreseeability standard

A major advantage of a corporation is ________.

the free transferability of shares

Which of the following situations is NOT an exception to the UCC Statute of Frauds?

the goods may be suitable for sale to others in the ordinary course of the seller's business

The party who transfers an ownership interest in real property is known as ________.

the grantor

Rebecca has three adult children and wants to make sure that they would not be unduly burdened by medical and funeral expenses at the time of her death, so she takes out an insurance policy. If Rebecca takes out a life insurance policy ________.

the insurer is obligated to pay a specific sum of money to her beneficiaries upon her death

Shareholders are ________.

the owners of a corporation who elect the board of directors and vote on fundamental changes in the corporation

According to the Revised Model Business Corporation Act (RMBCA), the articles of incorporation must include all EXCEPT which of the following?

the period of duration of the corporation

All of the following are requirements in order for the court to confirm a Chapter 13 plan of payment EXCEPT?

the plan must require payments for at least ten years

Surface rights are ________.

the rights to use, enjoy, and develop the land you own

The UCC Statute of Frauds requires all contracts for ________ costing _______ to be in writing.

the sale of goods; $500 or more

_____________ is an automobile insurance system used by some states in which the driver's insurance company pays for injuries or death the driver suffers in an accident, no matter who caused the accident.

No-fault coverage

Which of the following is NOT true about a condominium?

Usually, condominium owners may not sell or sublease their units without the approval of the other owners.

Insurance that compensates employees for work-related injuries is known as ______ insurance.

Workers' compensation

Zora, Heathcliff, Manuel, and Mohammad own a large commercial building as joint tenants. If Heathcliff executes a will that leaves all of his property to his alma mater university, who owns the property when Heathcliff dies?

Zora, Manuel, and Mohammad each own a one-third interest in the building.

An insurance _____ usually works exclusively for one insurance company, while an insurance _____ is an independent contractor who represents a number of insurance companies.

ACCT 340 final

संबंधित स्टडी सेट्स

Chp. 11 & 12 NUT 10

Unit 9 Real Estate Agency (Weight 8%)

History of the Internet and World Wide Web

AZ-900 Day 2

Contemporary Nigerian Art

Emotions Final

chapter 4

ECON 210 ch 34

NUIP Ch. 8 overview

Literary Devices Copy

English Download A2

ch. 11

Life of Pi Part 1

Module 3

Econ ch 13

Ch. 6 Intro to Consumer Credit

Social security

Media Publishing Terms

CompTIA Sec+ SY-601 Chapter 3

Psyc 212 Exam 1