Sky Toys, a chain of toy stores, charges its franchisees a fee for the use of its name that
is approximately 12.5 percent of monthly gross sales. In this instance, the franchisees
are paying ________ fees.
A) royalty
B) contingency
C) assessment
D) lease
What is the difference between the Analytical and Command Schools of jurisprudence?
A) The Analytical School believes that law is shaped by logic, while the Command
School believes that law is enforced by the ruling party.
B) The Analytical School believes that law is shaped by social traditions, while the
Command School believes that law is shaped by a moral theory.
C) The Analytical School believes that law is shaped by sociological goals, while the
Command School believes that legal rules are unnecessary.
D) The Analytical School believes that law is enforced by the ruling party, while the
Command School believes that law is based on a moral theory.
Which of the following statements is true about the liability of partners in a limited
partnership?
A) The general partners of a limited partnership have limited personal liability for the
debts and obligations of the limited partnership.
B) The liability of general partners extends to debts that cannot be satisfied with the
existing capital of the limited partnership.
C) Limited partners are personally liable for the debts and obligations of the limited
partnership.
D) A corporation as a general partner has an unlimited liability to the shareholders of
the company.
The ________ is the federal agency responsible for enforcing most federal
antidiscrimination laws.
A) Equal Employment Opportunity Commission
B) Fair Employment Practices Agency
C) Civil Service Commission
D) Merit Systems Protection Board
Diana borrows $10,000 from Thomas and signs a promissory note, promising to pay
Thomas this amount plus 10 percent interest in one year. Thomas indorses the note and
negotiates it to Frank. Frank indorses the note and negotiates it to Lila. Lila presents the
note to Diana for payment when the note is due. Diana refuses to pay the note. How can
each person recover the money?
What type of transaction is covered under the Magnuson-Moss Warranty Act?
A) consumer transactions
B) commercial transactions
C) industrial transactions
D) government transactions
A verification of a company’s books and records pursuant to federal securities laws,
state laws, and stock exchange rules that must be performed by an independent CPA is
known as a(n) ________.
A) probate
B) ademption
C) audit
D) deposition
The bank where the drawer has a checking account and on which a check is drawn is
called the ________ bank.
A) payer
B) depository
C) collecting
D) intermediary
Which of the following contradicts the mirror image rule?
A) silence as acceptance
B) option contract
C) counteroffer
D) acceptance-upon-dispatch
Trevor wants to buy a new refrigerator from the local dealer Ace Electronics for $5,000,
on credit. The dealer asks for someone to guarantee the payment before selling it on
credit. His sister Cindy agrees to sign the agreement as a guarantor. Which of the
following is true in this case?
A) Cindy is primarily responsible for the payment.
B) Cindy is secondarily responsible for the payment.
C) Cindy is responsible even if Trevor doesn’t default on the payment.
D) Cindy is not liable for payment.
Which of the following is true of a guarantor in a guaranty arrangement?
A) The guarantor is secondarily liable to the principal debtor’s debt when it is due.
B) The guarantor can be approached even if the principal debtor is not in default.
C) The creditor can seek first remedy from a guarantor.
D) The guarantor has full legal rights to possession of the real property in this type of
arrangement.
A(n) ________ is an amount paid by the franchisee to the franchisor for the continued
use of the franchisor’s trade name, property, and assistance that is often computed as a
percentage of the franchisee’s gross sales.
A) royalty fee
B) assessment fee
C) lease fee
D) contingency fee
Which of the following describes a vertical merger?
A) a merger between firms in totally unrelated businesses
B) a merger that integrates the operations of a supplier and a customer
C) a merger between two companies in similar fields whose sales do not overlap
D) a merger between two or more companies that compete in the same business and
geographical market
The courts apply the ________ in determining whether an arrangement is an investment
contract.
A) Howey test
B) misappropriation theory
C) strict scrutiny test
D) intermediate test
________ corporations are formed by government entities to meet a specific
governmental or political purpose.
A) Public
B) Nonprofit
C) Privately held
D) Publicly held
A cashier’s check is a(n) ________ check.
A) single-party
B) two-party
C) ordinary
D) invalid
Which of the following is a vertical restraint of trade?
A) group boycott
B) price fixing
C) resale price maintenance
D) division of markets
Klint Microsystems, a microprocessor manufacturer, was contracted by Zeitar Studios
to manufacture specially designed microchips. Zeitar was to pay Klint $300,000 as per
the contract. While the finished microchips were being shipped via a carrier, Klint was
informed of Zeitar’s insolvency. Klint cancelled the shipment before it was delivered.
Klint then resold the chips to another studio. What right to remedy did Klint exercise
when they stopped shipment to Zeitar?
A) right to dispose of goods
B) right to stop delivery of goods in transit
C) right to obtain specific performance
D) right to recover purchase rent
The rationale behind the ________ is that the right to petition the government has
precedence because it is guaranteed by the Bill of Rights.
A) failing company doctrine
B) unfair advantage theory
C) Noerr doctrine
D) Colgate doctrine
A ________ is an order of the court that orders that wages, bank accounts, or other
property of the breaching party held by third persons be paid to the nonbreaching party
to satisfy a judgment.
A) writ of attachment
B) writ of garnishment
C) specific performance
D) liquidation of damages
________ statutes extend a state’s jurisdiction to nonresidents who are not served a
summons within the state.
A) Long-arm
B) Concurrent jurisdiction
C) Forum-selection
D) Exclusive jurisdiction
Which of the following statements is true about the pretrial litigation process?
A) To initiate a lawsuit, the plaintiff must file an appeal in the proper court.
B) If the plaintiff does not answer a complaint, a default judgment is entered against
him or her.
C) A plaintiff files a cross-complaint against the defendant to seek damages.
D) A default judgment establishes the defendant’s liability.
Which of the following is true of a proxy?
A) The written authorization to vote by proxy is itself called proxy.
B) A proxy must always be oral.
C) Directors are allowed to vote by proxy.
D) Unless otherwise stated, a proxy is valid for one month.
How are additional terms in an acceptance to a contract viewed under the common law?
A) They are viewed as proposed additions to the contract.
B) They are seen as a counteroffer.
C) They are allowed into the contract by the battle of the forms rule.
D) They must be accepted under the mirror image rule.
________ imposes civil liability on accountants and others for making misstatements or
omissions of material facts in a registration statement, or failing to find such
misstatements or omissions.
A) Section 11(a) of the Securities Act of 1933
B) Section 10(b) of the Securities Exchange Act of 1934
C) Section 15 of the Securities Act of 1933
D) Section 12(a)(1. of the Securities Act of 1933
Mandy decided to sell her iPad, and made an offer to her friend Shelly for $250. Shelly
told Mandy she is willing to buy the iPad, but would be glad if Shelly could lower her
asking price. Mandy lowered the price to $210 and Shelly bought it. Which of the
following would describe Shelly’s response to Mandy for her second offer?
A) counteroffer
B) rejection
C) equivocal acceptance
D) grumbling acceptance
Contracts involving fraud in the inducement are ________.
A) unconscionable
B) void
C) voidable
D) non-rescindable
________ refers to illegal acts that are committed using computers, email, the Internet,
or other electronic means.
A) Mail fraud
B) Cyber Crime
C) Embezzlement
D) Racketeering
Which of the following legislations can a state adopt in determining whether an
accountant is liable in negligence to third parties?
A) Section 2(b) of the Robinson-Patman Act
B) Section 5 of the Federal Trade Commission
C) Section 552 of the Restatement (Second) of Torts
D) Section 16 of the Clayton Act
Which of the following is a method of alternative dispute resolution?
A) pretrial hearing
B) settlement conference
C) appeal
D) fact-finding
Enacted in 1932, the ________ is a federal statute which stipulates that it is legal for
employees to organize.
A) National Labor Relations Act
B) Labor Management Relations Act
C) Taft-Hartley Act
D) Norris-LaGuardia Act
Article 2 of UCC applies to a mixed sale of goods and services if the ________.
A) goods sold are of lesser value than the services
B) sale provides equal provisions for goods and services
C) goods are the predominant part of the transaction
D) sale involves services and goods in different transactions
Which of the following is true of a contract, the object of which has become unlawful
after the creation of the contract?
A) The contract is still legal as the object was legal at the time of creating that contract.
B) The contract is illegal even if the parties don’t complete the contractual agreement.
C) The parties of the contract will be discharged from that contract.
D) Both parties are still obligated to complete their contractual agreements.
A person cannot be imprisoned under Section 32(a) unless he or she had knowledge of
the rule or regulation violated.