Acct 340 Final
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
The party who transfers an ownership interest in real property is known as ________.
the grantor
Which of the following is NOT covered by home owners' insurance?
the items of a neighbor destroyed by the owner of the insurance
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
Transferors of negotiable instruments can be held liable for ________.
transfer warranties only
When can a lessee obtain specific performance from a lessor?
when the goods are unique
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
The special court that hears and decides business cases in Delaware known as the ________.
court of chancery
Which of the following is NOT a way in which a corporation may be dissolved and terminated?
criminal dissolution
A(n) _____ clause provides that insurance proceeds are payable only after the insured has paid a certain amount of the damage or loss.
deductible
The right to receive a fixed dividend at set periods during the year is known as ________.
dividend preference
A signature in the lower right hand portion of a check indicates that the signer is the _______.
drawer of the check
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 form of co-ownership that includes the right of survivorship is known as ________.
joint tenancy
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.
What is the difference between Chapter 7 and Chapter 13 bankruptcy?
Chapter 13 requires debtors to pay some of their future income to pay off prepetition debts, while Chapter 7 does not require it.
Which of the following is an INCORRECT statement regarding the corporation as a legal person?
Corporations are not separate legal persons.
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.
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 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 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.
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 statements about standard fire insurance is true?
It can be expanded to cover damage from windstorms via a rider.
Which of the following is true about the Convention for the International Sale of Goods (CISG)?
It does not require a sales contract to be in writing.
Which of the following is NOT a characteristic of a corporation?
It is not a separate legal entity.
Which of the following is an INCORRECT statement regarding a life estate?
The person who is given a life estate is called the proprietor.
________ 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
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 this is an ordinary lease
Margaret owns a house that burned down. Who does NOT have insurable interest in the house?
Margaret's mother, to whom Margaret owes money
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
How many states recognize a form of co-ownership known as community property?
9
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
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.
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 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 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.
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.
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
An order paper is negotiated by ________.
both delivery and indorsement
Universal defenses can be raised against ________.
both holders in due course and holders
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
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 regarding accounting malpractice (negligence)?
An accountant is relieved of liability if he or she can prove they followed applicableGAAP, GAAS, and/or IFRS.
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
Which of the following is an INCORRECT statement regarding common stock?
Common stock has a fixed maturity date.
_____ 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
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. This is the correct answer. Some omnibus clauses extend coverage to third parties who drive automobiles with permission from a person to whom the owner gave permission to drive the car. The owner can expand their coverage by adding an drive-other coverage (D.O.C.), which protects the insured while he or she is driving other automobiles (e.g., rental cars). A basic automobile liability policy protects the insured when driving his or her own automobile. The owner can expand their coverage by adding an omnibus clause, which protects the owner when someone else drives the car with permission.
_____ 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
More than 50 percent of the publicly traded corporations in the United States are incorporated in ________.
Delaware
_____ insurance provides a monthly income to an insured who is disabled and cannot work.
Disability
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.
__________ 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
Which of the following statements is NOT true regarding property that is exempt from the bankruptcy estate?
Federal exemptions are adjusted every 5 years.
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 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 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 a limited liability partnership (LLP)?
In an LLP, all of the partners are personally liable for the debts and obligations of the LLP.
An S corporation election is made by filing form 2553 with the ________.
Internal Revenue Service
Which of the following is a reason why the United Nations Convention for the International Sale of Goods (CISG) is increasingly being used for international sales transactions?
It is written in plain business language that is more easily understood by contracting parties than the laws of many nations.
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.
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 an insurable interest?
Mortgagees do not have an insurable interest in property. Anyone who would suffer a monetary loss from the destruction of real or personal property has an insurable interest in that property. If the insured does not have an insurable interest in the property being insured, the contract is treated as a wager and cannot be enforced. Ownership creates an insurable interest. Anyone who would suffer a pecuniary loss from the destruction of real or personal property has an insurable interest in that 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.
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 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.
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 NOT true about an audit committee?
The audit committee must register with the Public Company Accounting Oversight Board.
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.
_____ 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
_____ 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
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 is a buyer in the ordinary course of business?
a person who, in good faith and without knowledge that the sale violates the ownership or security interests of a third party, buys goods in the ordinary course of business
What is an insurance contract called?
a policy
The money paid to the insurance company is called _____.
a premium
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
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
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
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
In order to amend the articles of organization for New Navy, LLC, ________.They are only liable to the extent of their capital contributions to the corporation.
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
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
Which of the following is NOT covered by personal liability insurance?
any injuries the insured sustains off the property of the insured
Who below would NOT be a party to a life insurance contract?
any witnesses who sign the contract
Brooke's next-door neighbor allows Brooke to run a driveway over his land. This sort of easement is known as an easement _____________.
appurtenant
The articles of incorporation ________.
are the basic governing documents of a corporation
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
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
When a buyer purchases substitute goods when a seller fails to make delivery, it is known as which of the following?
cover
When a lessee purchases or leases substitute goods when a lessor fails to make delivery, it is known as _______.
cover
In a winding up of a corporation, which of the following claimants will have highest priority?
creditors
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 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
An instrument that describes a person's ownership interest in a piece of real property is known as a ________.
deed
What are the two primary duties of an insurer?
defend and pay
Medical health insurance plans usually cover all of the following EXCEPT?
dental care
In order to select a name for a new corporation, the organizer should ________.
determine whether the name is federally trademarked
Actions or events that relieve certain parties from liability on negotiable instruments are known as _____________.
discharge
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
The buyer has all of the following options if the goods or delivery fail to conform to the contract EXCEPT?
dispose of the goods
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
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
A person's ownership right in real property is called a(n) ________.
estate in land
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
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
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 Hu
foreseeability standard
A holder in due course is a holder who takes a negotiable instrument ___________________.
free of all claims and most defenses that can be asserted against the transferor
What business organization that is owned by two or members is taxed like an LLC?
general partnership
The ________ is the party to whom an interest in real property is transferred.
grantee
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
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
Which defenses may be asserted against a holder in due course?
illegality
Ryan enters into a contract with ABC Appliance Center to purchase new kitchen and laundry appliances for his newly constructed apartment complex. A week after signing the contract, Ryan notices a "Going Out of Business" sign in ABC's window. Ryan should __________.
immediately request an adequate assurance of performance
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 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
Incontestability clauses generally protect the position(s) of the ____________.
insureds
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
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
In a lease contract, who is the person(s) who transfers the right of possession and use of goods under the lease?
lessor
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
An interest in real property for a person's lifetime is known as a(n) _________.
life estate
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
In a ___________ managed limited liability company (LLC), the managers have the authority to bind the LLC to contracts.
manager-
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
In an international letter of credit transaction, the seller's bank is called the ________ bank.
nominated
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
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
To obtain property via adverse possession, all of the following are needed EXCEPT?
permission of the property owner
A holder in due course takes the negotiable instrument free from ______ defenses.
personal
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
An insurance contract is called a(n) _____.
policy
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
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
In a _________, the seller delivers the goods to a buyer with an understanding that the buyer may return them if they are not used or sold within a stated period of time.
sale or return 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
Who bears the risk of loss during shipment in a destination contract?
seller
A destination contract requires the seller to deliver goods to either the buyer's place of business or another destination, with title passing when _______________.
seller tenders delivery of the goods at the specified destination
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
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 are ________.servient
shareholders
Owners of corporations are called _____.
shareholders
In a member-managed limited liability company (LLC), each member has the right to ________.
sign contracts on behalf of the LLC
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
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
What remedy does a seller have if the goods are in the possession of a common carrier and the buyer or lessee breaches the contract?
stopping goods in transit
Joint tenancy is a form of co-ownership that includes the right of _____.
survivorship
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
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
Express powers of a corporation are granted by all of the following sources of law EXCEPT?
the Revised Model Business Corporation Act (RMBCA)
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 This is the correct answer. the absolute liability standard the comparative negligence doctrine the strict liability standard the contributory negligence doctrine
The United Nations Convention on Contracts for the International Sale of Goods (CISG) applies to contracts for the international sale of goods when ________.
the buyer and seller have their places of business in different nations and both nations are signatories of the CISG
Who is liable for a corporation's debts and obligations?
the corporation
Monthly benefits under disability insurance policies are usually based upon _________.
the degree of disability incurred by the insured
If an owner entrusts possession of his or her goods to a merchant who deals in goods of that kind, the merchant has the power to transfer all rights (including title) in the goods to a buyer in the ordinary course of business. This is known as ___________.
the entrustment rule
A holder who does not qualify as a holder in due course in his or her own right becomes a holder in due course if he or she acquires the instrument through a holder in due course. This is called _______________.
the shelter principle
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
Insurance that owners of real property purchase to ensure that they have clear title to the property is known as ________ insurance.drawer of the check
title
Once the seller tenders delivery of the goods, what is the buyer's general obligation?
to accept and pay for the goods
Why was the FTC HDC rule enacted?
to correct the harsh result of the holder in due course rule in connection with consumer purchasers of goods
Which of the following is a seller's obligation?
to deliver conforming goods
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
A conditional sale is a(n) ___________.
type of sale where the seller entrusts possession of goods to a buyer on a trial basis
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
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
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
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 an umbrella policy make a pay out?
when primary policy limits on other insurance policies have been exceeded
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 _______ 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
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?
$0
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
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 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.
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
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 bond is a _________ security that is __________.
long-term, debt; secured by some form of collateral
A debenture is a _________ debt instrument that is __________.
long-term, unsecured; based on a corporation's general credit standing
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
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
A corporation with more than 100 shareholders would automatically be considered a(n) ________.
C corporation
Which of the following statements about a Chapter 11 bankruptcy is true?
Chapter 11 is available to individuals, partnerships, corporations, and other business entities.
An LLC is a(n) _____ LLC unless it is designated as a(n) _____ LLC.
at-will; term
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
Which of the following is NOT true about holding companies?
Many holding companies are S corporations.
Jordan writes a $1,000 check to Marilyn. Marilyn raises the amount on the check to $10,000 by skilled handwriting. Marilyn negotiates the check to Brian. Brian presents the check to a car dealership for payment on a car. The car dealership then submits the check to the bank for payment. Which party has made the implied presentment warranty?
Marilyn
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 bankruptcy court has the power to void certain fraudulent transfers of a debtor's property made by the debtor within ______ year(s) prior to filing a petition for bankruptcy.
Two
The _____ is a model act that provides comprehensive and uniform laws for the formation, operation, and dissolution of LLCs.
ULLCA
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 g
Ultramares doctrine
The articles of incorporation are also referred to as the corporate _____.
charter
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
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
Which of the following is NOT a possible preference held by preferred stockholders?
right to authorize new shares
________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
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.
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 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
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
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.
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 o
Jim Bob, Carlos, Carole, and Serena are not liable for the $900,000 owed to the bank.
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.
_____ 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.
_____ 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
_________ 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
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
_____ 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
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 Correct answer the comparative negligence doctrine the contributory negligence doctrine the absolute liability standard the strict liability standard
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. Sandy trips on the garden house and is injured. Which of the following is true?
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
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
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
Which of the following is an INCORRECT statement regarding an insurable interest?
Tenants do not have an insurable interest in property.
________________________ made it more difficult for debtors to relieve themselves of unwanted debt through bankruptcy proceedings.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
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 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.
What is the limited liability of shareholders?
They are only liable to the extent of their capital contributions to the corporation.
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.
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.
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
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
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
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
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
If Anastasia indorsed her check by writing "without recourse" above her signature, what type of indorsement would be created?
qualified
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
If the right of possession returns to a third party on the expiration of a limited or contingent estate, it is called a _____.
remainder
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
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 This is the correct answer. the comparative negligence doctrine the contributory negligence doctrine the absolute liability standard the strict liability standard
A major advantage of a corporation is ________.
the free transferability of shares
If the name of the payee or indorsee is misspelled in a negotiable instrument ________.
the indorsee can indorse the check using the misspelled name, the correct name, or both
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
_____________ 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.
agent; broker
The duration of a limited liability company (LLC) is ________.
at-will
