Under the Endangered Species Act, what federal agency in the Department of the
Interior is responsible for preparing a list of species that are in danger of becoming
extinct?
a. National Park Service
b. Fish and Wildlife Service
c. Bureau of Land Management
d. Bureau of Safety and Environmental Enforcement
Musical Productions has a privacy policy posted on its website but it does not follow
the provisions contained within it. Musical Productions is in violation of
a. the CAN-SPAM Act.
b. the Communication Decency Act.
c. Section 5 of the FTC Act.
d. the Electronic Communications Privacy Act.
What is the “gap period”?
a. The period of time between the time a debtor files for bankruptcy and the time that he
is granted discharge
b. The period of time that creditors must wait to be paid once a plan of payment is
approved
c. The period between the time that a creditor files for an involuntary petition and the
court issues the order for relief
d. The period between the time a debtor files for bankruptcy and the time that the plan
of payment is approved
Walter worked nights as a clerk in a fast-food store. On his last work shift, Walter’s boss
told him, “I’m really grateful for the year that you have worked here. I am going to give
you a bonus of $1,000 in your last paycheck.” When Walter got his last paycheck, there
was no bonus. If Walter sues, the likely result will be
a. Walter will win, as the promise is enforceable.
b. Walter will lose, as he gave no consideration.
c. Walter will lose unless the promise was in writing.
d. Walter will win, as no consideration is required to modify an employment contract.
Which of the following statements regarding social enterprises is TRUE?
a. Social enterprises are essentially nonprofit organizations.
b. To become a socially conscious organization, one-half of shareholders must approve.
c. The focus of social enterprises is the motto “reduce, reuse, recycle.”
d. Unlike charities, social enterprises can sell stock to investors.
The bankruptcy of an agent automatically terminates an agency relationship.
a. True
b. False
Which of the following types of contracts cannot be either contradicted or
supplemented by evidence of prior agreements or expressions?
a. integrated contracts
b. incomplete contracts
c. ambiguous contracts
d. implied contracts
Ed, a vice-president of Palmette Products, Inc., buys 1,000 shares of his companys
stock on June 15. His son has medical problems in September, and Ed sells the stock at
a profit. Under Section 16, Ed
a. must turn over to Palmette any profits he made on the sale.
b. may keep any profits on the sale since he had a good reason to sell and was not
selling in order to manipulate the market.
c. may keep the profits from the sale as long as he reported his sale to the SEC within
two business days.
d. may keep any profits from the sale if he did not act on secret information when he
sold the shares.
Generally, managers that make informed decisions will not be liable even if their
decision turned out badly.
a. True
b. False
Imogene takes her diamond solitaire ring to Sparkle Jewelry Shop to have the prongs
holding the diamond retipped and have the ring cleaned. The clerk at Sparkle says she
will have to leave the ring and that it should be ready in about a week. When Imogene
returns in a week to get her ring, she finds out that the ring has been sold. Which of the
following is true?
a. Sparkle Jewelry Shop had the power to transfer all of Imogene’s rights in the ring to a
good faith buyer in the ordinary course of business.
b. This situation was a theft of the ring by Sparkle, and Sparkle must retrieve the ring
and return it to Imogene.
c. The buyer of the ring must return it to Imogene since the buyer did not fully
investigate whether Sparkle had good title to the ring.
d. Imogene has lost title to her ring and has no recourse since she is responsible for
investigating the merchant’s integrity before leaving her property.
What does it mean if a party to a contract has been discharged?
a. It means that person has been “let go” and has terminated the contract.
b. It means that person has “transferred” by assigning his or her duties to another party.
c. It means that person is “finished” and has no more duties under the contract.
d. It means that person has “delegated” and chosen to give up his or her contract rights.
Administrative agencies exist at the federal, state, and local levels.
a. True
b. False
Under what type of securities offering must the issuer determine if the investor is an
accredited, sophisticated investor and if the stock is restricted?
a. Regulation A offering
b. Regulation D offering
c. Public offering
d. An interstate offering
Patrick owned an acre of land which was being divided into building lots. Nancy was
interested in purchasing the corner lot. In a signed writing, Patrick stated “I will sell
Nancy Grimes a lot on Route 70 for $5,500 cash, payable on April 30, 2012. This
writing is sufficient under the statute of frauds to make the contract enforceable.
a. True
b. False
Criminal liability for accountants
a. is not an option under securities law; there is only civil liability.
b. is possible under the Securities Act of 1933, the 1934 Act, state securities laws, and
the Internal Revenue Code.
c. may result in fines but not imprisonment from violation of the federal securities laws.
d. will result from violation of the accountant-client privilege under federal law.
Brock and Heidi agree to jointly run a fundraiser for the nonprofit childrens hospital.
Even if they dont have a formal, written agreement, they have formed a partnership.
a. True
b. False
MegaCorp purchased 10,000 shares of its own stock that had previously been owned by
private investors. The stock MegaCorp repurchased is called
a. authorized and unissued.
b. authorized and issued.
c. treasury stock.
d. repurchased stock.
Runyon was ready to sign a two-year agreement with Barnett Corp. to become Barnetts
sales representative for a three-state area. LaPrise, who wants to be the representative
for that area, threatens Runyon with bodily harm if he takes the position. Runyon
decides his physical well being is more important to him than the job, so he does not
accept the position. LaPrise
a. committed tortious interference with a contract.
b. committed tortious interference with a prospective advantage.
c. committed a battery.
d. caused a breach of contract and committed the tort of intrusion.
Which of the following describes the duty of loyalty?
a. It requires managers to make decisions they reasonably believe to be in the best
interest of the corporation.
b. It prohibits managers from making a decision that benefits them at the expense of the
corporation.
c. It requires consideration of the interests of the surrounding community.
d. It requires using care that an ordinarily prudent person would take in a similar
situation.
Lying on her hospital bed alone one night, Phyllis grabs a pen and paper. With the last
of her strength, she wrote her last will and testament leaving all her worldly possessions
to her next-door neighbor, Aaron. This type of will is
a. a nuncupative will.
b. a disinherited children’s share will.
c. a holographic will.
d. illegal in all states.
If Oregon passed a statute that prohibited liquor stores from engaging in any kind of
advertising, that statute would be
a. valid as an exercise of police power.
b. valid, as alcohol is illegal for minors.
c. invalid as a violation of the Commerce Clause.
d. invalid as an unreasonable restriction of free speech.
Agnes plans to file for bankruptcy under Chapter 7. One month prior to filing, Agnes
gives Joe’s Filling Station $700 to apply to her gas bill. Joe has been so kind to let her
charge the gas she needed for her car over the past year. The bankruptcy trustee
appointed to the case
a. can cancel the payment to Joe as a fraudulent transfer.
b. cannot cancel the payment to Joe because it is payment for an existing debt.
c. cannot cancel the payment to Joe because he is not an insider.
d. can cancel the payment to Joe as a voidable preference.
An agent must obey all instructions of the principal.
a. True
b. False
Manuel, in conducting an audit, must rely most heavily on rules found in generally
accepted accounting principles (GAAP).
a. True
b. False
Abdulla hired Granite Construction to build an addition onto his home. Granite
Construction dug the foundation but then abandoned the project. Granite Construction
is entitled to receive the full contract price minus the value of the defects.
a. True
b. False
The principle that each government has the absolute authority to rule its people and its
territory is known as
a. legitimacy.
b. immunity.
c. jurisprudence.
d. sovereignty.
The Children’s Online Privacy Protection Act
a. deals only with the collection of data that will be disclosed to children.
b. restricts the use of social media sites by children.
c. regulates the activities of Internet operators with regard to collecting information
from children.
d. is enforced by the EEOC.
Preemptive rights are
a. not legal in the majority of states.
b. designed to prevent dilution of a shareholder’s ownership in the company.
c. required to be offered to shareholders by the Model Act.
d. designed to indemnify managers who act in good faith.
Which of the following types of property would be considered “goods” under the
Uniform Commercial Code?
a. a promissory note
b. a stock
c. a patent
d. a computer
To be valid, a noncompete clause must be
a. ancillary to a legitimate bargain.
b. reasonable in time, geographical area, and scope of activity when ancillary to the sale
of a business.
c. necessary to protect trade secrets, confidential information, or customer lists
developed over an extended time when ancillary to an employment contract.
d. All of the above.
Liz and Jeff live in California, a state that recognizes community property. Jeff is a
machinist who makes $30,000 a year. Liz is the owner of a franchise where her
take-home profit is approximately $75,000 a year. Jeff and Liz purchased a house
during their marriage wherein Liz paid three-fourths of the purchase price and Jeff paid
one-fourth. Which of the following statements is correct with regard to Jeff and Liz?
a. Each owns one-half of the real property and other assets they acquire during the
marriage.
b. The community property rules do not allow Jeff and Liz to maintain separate
ownership of assets they each bring to the marriage or inherit.
c. Community property can be sold by Jeff or Liz without consent by the other.
d. Jeff owns one-fourth of the property and Liz owns three-fourths.
After answering a summons and complaint, Mike received a set of written questions
from the plaintiff’s attorney. He was directed to respond to the questions in writing
under oath. This discovery technique is called
a. a request for admission.
b. a request for the production of documents.
c. a deposition.
d. interrogatories.