The modern approach follows the common law rule in holding that a corporation cannot
commit a criminal act.
a. True
b. False
Which of the following duties would not be delegable?
a. John has a contractual duty to pay Isaac $50.
b. Karl has a contractual duty to deliver 50 bushels of corn to Michael by October 1.
c. Jeffrey has a duty to mow Georgia’s lawn at least once a week.
d. Arthur has a duty to teach an accounting class at a community college during the fall
semester.
If Smith works for Jones under an informal arrangement by which there is no contract
stating dates for beginning or ending the relationship, Brown Co. could induce Smith to
quit her job with Jones and come to work for Brown Co. without liability to Jones.
a. True
b. False
The law establishes a test for determining whether a partnership has been formed. The
test includes which of the following?
a. An association of two or more persons.
b. Conducting a business not necessarily for profit.
c. That the partnership agreement is filed with the Secretary of State.
d. The sharing of gross returns.
Which of the following terms would indicate a destination contract?
a. F.O.B. city of buyer.
b. F.O.B. city of seller.
c. C.I.F.
d. F.A.S. seller’s port.
The Private Securities Litigation Reform Act of 1995 provides that an auditor can be
held liable in a private action for any finding, conclusion, or statement expressed in the
report the Act requires the auditor to make to the SEC.
a. True
b. False
Rena employs James, a real estate broker, to find a buyer for her home for a price of at
least $125,000. James has the actual implied authority to contract for the sale of Renas
home.
a. True
b. False
If Janice, while driving her car, negligently runs into Paul, a pedestrian who is carefully
crossing the street, Janice is liable for:
a. physical injuries Paul sustains from the collision because Janices negligent conduct
proximately caused harm to a legally protected interest.
b. offensive contact if her side mirror brushes against Paul, even if there are no physical
injuries to him.
c. offensive contact if her car touches Pauls coat, even if there is no damage to the coat.
d. All of these.
Which of the following is a collateral promise?
a. A mother tells a merchant to extend $1,000 worth of credit to her son and says, “If he
doesn’t pay, I will.”
b. Andrew promises Donald that if Donald cannot pay his bills, Andrew will.
c. A father tells a merchant to deliver a computer to his daughter and says, “Send me the
bill. I’ll pay for it.”
d. All of these are collateral promises.
An agreement to pay a public officer something extra for performing his official duty is
enforceable.
a. True
b. False
Fungible goods are goods for which one unit is the equivalent of any other unit.
a. True
b. False
A major criticism of utilitarianism as an ethical theory is that:
a. it is rigid.
b. in some important instances it ignores justice.
c. it results in the judgment that a persons actions are always moral for that person and
therefore exempt from punishment.
d. it is excessively formal.
Chapter 7 applies to all debtors, with the exception of railroads, insurance companies,
banks, savings and loan associations, homestead associations, and credit unions.
a. True
b. False
Al owns a farm that he believes is worth $150,000. Betty knows that there is oil under
the farm and offers Al $160,000 for it. Al accepts and sells the farm to Betty. Al later
realizes that the land was worth more than $160,000. Al can have the contract avoided
based upon fraud.
a. True
b. False
Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, and the
Age Discrimination in Employment Act apply to U.S. citizens employed abroad by U.S.
employers or by foreign companies controlled by U.S. employers.
a. True
b. False
In a partnership of A, B, and C, A commits fraud which creates a liability to the
partnership of $9,000. If the three partners share profits and losses equally, A‘s liability
to the partnership for his fraudulent act is $3,000.
a. True
b. False
The Brentwood Academy v. Tennessee Secondary School Athletic Association case
illustrates the point that when Congress has not intended to displace all state legislation,
nonconflicting state legislation is permitted.
a. True
b. False
Interpretative rules are exempt from the APA’s procedural requirements of notice and
comment.
a. True
b. False
Bryant knowingly destroyed documents in order to impede an SEC investigation of his
company. Under the Sarbanes-Oxley Act:
a. Bryant may be personally subject to fines.
b. Bryant is subject to imprisonment of up to 20 years.
c. Bryants company may be subject to criminal penalties.
d. All of these
There is an International Organization of Securities Commissions made up of
approximately 100 national securities agencies and exchanges which regulates about
half of the worlds securities markets.
a. True
b. False
An acceptor should always indicate on the instrument the amount accepted.
a. True
b. False
The directors of Premier Glass Company authorize the issuance of 100 shares of
common stock for $25 per share to Justin for property the directors value at $2,500. The
valuation:
a. is, in all jurisdictions, a matter of opinion on the part of the directors and their
valuation is conclusive.
b. if incorrect, whether or not made in good faith, subjects Justin to liability for the
difference between the valuation and the actual worth of the property.
c. under the Revised Act, depends on the directors determination of the considerations
“adequacy.
d. if fraudulent, subjects the directors to liability to Premier for the difference between
the fraudulent valuation and the actual worth of the property.
Michelle and Margaret agree to form a partnership. The partnership contract between
Michelle and Margaret does not have to be in writing in order to be enforceable in the
courts.
a. True
b. False
Social egalitarians believe:
a. the ends justifies the means.
b. society should provide each person with equal amounts of goods and services
regardless of the contribution each makes to increase society’s wealth.
c. society should divide wealth based on each person’s contribution.
d. that if persons wish to act morally, they should emulate those in the society who
always seem to do the right thing.
The United States Congress overwhelmingly ratified the Kyoto Protocol relating to
multi-national reduction of greenhouse gases.
a. True
b. False
A compulsory share exchange requires approval from the board of directors of each
corporation, but not shareholders of either corporation.
a. True
b. False
Which of the following represents concurrent property ownership?
a. A cooperative.
b. A life estate.
c. A lease.
d. A fee simple absolute.
A noncontractual promise may be enforceable where there has been justifiable reliance
on the promise.
a. True
b. False
Linton, as a sales agent for Nancy, may keep the money for the sales in his personal
bank account until due to her as long as he keeps accurate records of the amounts he
must separate out to pay to her.
a. True
b. False
Criminal sanctions for accountants are limited to punitive fines.
a. True
b. False
Discuss each of the following ethical theories with regard to whether you accept or
reject them for your own actions and decisions.
a. Intuitionism and the “Television Test.”
b. Rule utilitarianism.
c. Ethical relativism.
d. Ethical fundamentalism.
e. The deontological approach.
f. Milton Friedman’s ideas on corporate governance.
The federal government’s power to tax has no limitations.
a. True
b. False
Which of the following is true of warranty liability as it affects negotiable instruments?
a. Warranty liability applies to any persons who transfer an instrument and receive
consideration.
b. A drawee of an unaccepted draft who pays in good faith receives a presentment
warranty from the person obtaining payment and from all prior transferors of the draft.
c. A drawee who accepts an instrument in good faith receives a presentment warranty
from the person obtaining acceptance that the draft has not been altered.
d. All of these.
e. None of these.
Mark tells Leslie that his sweeper has a four-stage allergen filtration system because he
was told that when he bought it. Leslie buys the sweeper from Mark, but it does not
have the four-stage allergen filtration system. Is Mark liable for breach of warranty?
a. No, because he did not know his statement was false.
b. No, because he did not promise her that the sweeper would filter virtually all
allergens because of the four stages.
c. Yes, because the statement was false.
d. Yes, because Mark was not acting in good faith.