A testator’s children would be called his issue.
The Private Securities Litigation Reform Act of 1995 requires an auditor to:
A. report to the Securities and Exchange Commission a client’s illegal act that has a
material impact on the financial statements of the client when the client has failed to
take remedial action.
B. resign from an audit engagement when the client commits an illegal act that has a
material impact on the financial statements of the client and the client has failed to take
remedial action.
C. inform a client’s shareholders of the client’s illegal act that has a material impact on
the financial statements of the client when the client has failed to take remedial action.
D. force a client to disclose to its shareholders and to the Securities and Exchange
Commission a client’s illegal act that has a material impact on the financial statements
of the client when the client has failed to take remedial action.
For _____, cost justification is the primary statutory defense to liability under Section
2(a) of the Robinson-Patman Act.
A. functional discounts
B. accumulation pricing
C. quantity discounts
D. predatory pricing
To which of the following is Chapter 11 not available?
A. Manufacturing corporations
B. A sole proprietorship that sells used cars
C. A bank
D. A natural person
Which of the following is least likely to create liability for the first form of invasion of
privacy (intrusion on personal solitude or seclusion)?
A. Using binoculars to look from your apartment into a neighbor’s bedroom.
B. Tapping someone’s telephone, because this is a nonphysical intrusion.
C. Examining someone’s bank account.
D. Examining public records concerning a person.
Partners are not liable to their partnership for losses resulting from:
A. gross negligence.
B. reckless conduct.
C. intentional violation of the law.
D. honest errors in judgment.
Which type of marks is most likely to be registered for trademark protection?
A. Suggestive
B. Arbitrary
C. Descriptive
D. Generic
Joe buys some watermelon seeds from a seed manufacturer’s catalog. The catalog
describes the seed Joe buys as “top quality.” Joe strongly relies upon this statement in
making the purchase. The seed turns out to be worthless, and Joe sues the manufacturer
for breach of express warranty. You are the attorney representing the manufacturer.
Which of the following is your best argument for escaping liability?
A. That a catalog statement cannot create an express warranty.
B. That the basis-of-the-bargain requirement was not met.
C. That the alleged warranty was merely sales talk.
D. That the manufacturer did not give a sample or a model of the seeds.
A retailer of consumer goods who relies on attachment of a security interest to perfect it
does not prevail over a bona fide purchaser:
A. who has knowledge of the security interest.
B. who gives value for the goods.
C. who buys goods for household use.
D. who resells the good in the absence of a financing statement.
In which of the following situations will a business incorporated in Ohio be required to
qualify to do business in Kentucky?
A. The business maintains a stock of goods in Kentucky from which it sells to
customers in Kentucky.
B. The business owns a building in Kentucky, which it holds for investment.
C. The business sends a sales agent to Kentucky to solicit orders from customers in
Kentucky, while orders are brought back to and accepted in Ohio.
D. The business sells its goods to customers in Kentucky through independent
distributors located in Kentucky.
Who among the following have the capacity to enter into a contract?
A. Persons suffering from mental illness
B. Adults that have divorced
C. Minor aged individuals
D. Individuals intoxicated at the time of entering into a contract
Provided that most of the directors of a corporation are independent, if shareholders
bring a derivative action against the directors, the burden of proving that bringing the
action is in the best interest of the corporation lies on the:
A. company secretary.
B. secretary of state.
C. board of directors.
D. shareholders.
Offers that fail to provide a specific time for acceptance are:
A. considered to be illegal.
B. are valid for a reasonable period for time.
C. are valid but unenforceable.
D. can be used to penalize the offeror.
The _____, enacted in 1970, required that an environmental impact statement be
prepared for every recommendation or report on legislation and for every major federal
action significantly affecting the quality of the environment.
A. Comprehensive Environmental Response Compensation and Liability Act
B. Clean Air Act
C. National Environmental Policy Act
D. Toxic Substances Control Act
UCC section 1-203 makes what form of requirement on the buyer and seller?
A. Both must act in good faith
B. Both must have signed the sales agreement
C. Both buyer and seller must be residents of same state
D. Both must have placed a security interest down on the contract
Which of the following serves essentially the same function as a magistrate’s probable
cause determination?
A. Arraignment
B. Special deterrence
C. Indictment
D. Incapacitation
Brown, a CPA, helped Cook organize a partnership that was actually an abusive tax
shelter. Brown induced clients to participate by making false statements concerning the
eligibility of deductions and tax credits. As a result of these activities, Cook derived
$100,000 gross income and Brown derived $50,000 gross income. According to federal
tax law, what is Brown’s penalty for promoting this abusive tax shelter?
A. $100,000
B. $10,000
C. $1,000
D. $50,000
Mark is a partner in Harbin Associates, a partnership. The term of the partnership
agreement is one year and includes a clause on buyouts. After the term expires, Mark
decides to dissociate while the remaining partners wish to continue. Under the RUPA:
A. the remaining partners must wind up and terminate the partnership.
B. they must buy out Mark of his interest on Mark’s demand for the same.
C. they must not pay Mark the greater of the liquidation price or the sale price of the
business.
D. they can renew their partnership agreement.
Nina lent her car, which she knew had bad brakes, to Heidi. However, she did not
inform the latter about the defect. As Heidi was driving down the highway, she met with
an accident due to the faulty brakes. In this case:
A. Nina is not liable to Heidi because she was never asked about the brakes.
B. Nina is liable to Heidi because she did not inform her of the defect.
C. Heidi is liable to Nina because she had damaged Nina’s car.
D. Heidi is liable to Nina because she gave no consideration in return for the car.
_____ is the ability to incur legal obligations and acquire legal rights.
A. Capacity
B. Emancipation
C. Necessity
D. Disaffirmance
Any attempt to limit consequential damages for injury caused to a person by consumer
goods is considered prima facie _____.
A. unconscionable
B. reasonable
C. punitive
D. penal
_____ of the Robinson-Patman Act prevents large buyers, either directly or through
subsidiary brokerage agents, from receiving phony commissions or brokerage payments
from their suppliers.
A. Section 2(f)
B. Section 2(c)
C. Section 2(a)
D. Section 2(e)
In technical legal terms, a party not equally in the wrong is said to be not in _____.
A. res ipsa loquitur
B. ab initio
C. pari delicto
D. ad idem
Most defamation cases brought by public official or public figure plaintiffs are won by
the defendant, because the plaintiff was unable to prove:
A. damages due to defamation.
B. actual malice.
C. defendant made the statements.
D. the actual statements were untrue.
Contracts that are induced by misrepresentation are considered:
A. voidable.
B. enforceable.
C. material.
D. fraudulent.
Infobox Online, an Internet services provider, includes in its “clickwrap” contract a
clause stating that California courts have “exclusive jurisdiction” over subscribers’
disputes with Infobox Online. This clause will most likely be:
A. unenforceable because it was not the result of bargaining.
B. unenforceable against a subscriber in another state.
C. enforceable if the subscriber does not file a motion to dismiss.
D. enforceable if it is considered reasonable by a court.
Which of the following is an example of a transaction exemption from the registration
requirements of the 1933 Act?
A. Securities issued by municipal governments in the United States and offered solely
to banks.
B. Securities issued by nonprofit charitable organizations and offered solely to
institutional investors.
C. Securities issued by banks and offered solely to investors sophisticated in investment
matters.
D. Securities issued by for-profit corporations and offered solely to intrastate investors.
An individual will not be granted a discharge, if such discharge has been granted to the
individual within the previous:
A. five years.
B. six years.
C. seven years.
D. eight years.
Ron was employed by Mass Co. in 1970. At that time, he was given an employee
handbook that described the particular steps that had to be taken before an employee
could be fired. Later on, in 2000, Mass published a new handbook by which all workers
status were changed to employment-at-will workers. Mass then fired Ron. Ron claimed
he was terminated without cause and was not afforded procedures described in the 1970
handbook, such as an appeal or review of the decision. He sued Mass under breach of
contract based upon the 1970 employee handbook. Will he succeed?
A. Yes, because the modifications in 2000 were not by mutual consent and for
consideration.
B. No, because the employee handbook contains terms and conditions of the
employment contract.
C. Yes, because Mass Co. has arbitrarily terminated Ron.
D. No, because Ron had acquiesced to the modification by not raising any objection.
Ritz Co. wished to acquire Smart Inc. In conjunction with its plan of acquisition, Ritz
hired Felix, a CPA, to audit the financial statements of Smart. Based on the audited
financial statements and Felix’s unqualified opinion, Ritz acquired Smart. Within six
months, it was discovered that the inventory of Smart had been overstated by $500,000.
Ritz commenced an action against Felix. Ritz believes that Felix failed to exercise the
knowledge, skill, and judgment commonly possessed by CPAs in the locality, but is
unable to prove that Felix either intentionally deceived it or showed a reckless disregard
for the truth. Ritz is also unable to prove that Felix had any knowledge that the
inventory was overstated. Which of the following would provide Ritz with a proper
basis for prevailing in a lawsuit against Felix?
A. Negligence and breach of contract
B. Gross negligence and fraud
C. Negligence and fraud
D. Gross negligence and breach of contract
Catz Corporation has two majority shareholders and five minority shareholders. The
five minority shareholders created a voting trust in November 2011 to control Catz
through the concentration of shareholder voting power in the voting trustees. Under the
Model Business Corporation Act (MBCA), this voting trust will be valid till:
A. September 2014.
B. October 2021.
C. September 2026.
D. October 2016.
Which of the following is an accurate statement about property insurance policies?
A. They are less likely to provide coverage for flood-related losses than for
lightning-related losses.
B. They are more likely to provide coverage for losses resulting from friendly fires than
for losses resulting from hostile fires.
C. They do not provide coverage for losses resulting from fires that were intentionally
caused by persons having no connection with the insured.
D. Requisite insurable interest must generally exist at the time of the entering into the
policy.
What is an amendment of a will called?
A. Bequest
B. Residuary
C. Advance directive
D. Codicil
Courts tend to treat _____ similarly because they are similar in motivation and effect.
A. exclusive dealing and reciprocal dealing agreements
B. joint venture agreements and exclusive dealing agreements
C. joint venture agreements and tying agreements
D. reciprocal dealing agreements and tying agreements
The rights to notice of the charges brought against you and to some kind of fair trial or
hearing to prove those charges are central requirements of:
A. substantive due process.
B. equal protection.
C. procedural due process.
D. economic due process.
