An agreement to refrain from a particular trade, profession, or business is enforceable
if:
a. the purpose of the restraint is to protect a property interest of the promisee.
b. the agreement is for no longer than two years.
c. the restraint is no more extensive than is reasonably necessary to protect the
promisee’s property interest.
d. Both (a) and (c).
If Sam leases property “to Susan as long as Sam wishes,” the landlord has created a(n):
a. fee simple absolute.
b. estate (tenancy) at will.
c. condominium.
d. estate at sufferance.
If Class A preferred shares provide only for a cumulative dividend of $3 per share, upon
liquidation Class A Preferred will:
a. receive $3 per share more than common shares.
b. receive 103 percent of common shares.
c. share pro rata with common shares.
d. be subordinated to the rights of common shares.
The customary manner of disclaiming the indorser’s contractual liability is to add which
of the following sets of words before or after his signature?
a. For collection only.
b. Without recourse.
c. Pay to the order of.
d. For deposit only.
Which of the following would be an indorsement in trust?
a. Pay Donna for Alice.
b. Pay Donna for account of Alice.
c. Pay Donna as agent of Alice.
d. All of the above are indorsements in trust.
The particular fund doctrine is:
a. merely an instruction to pay the instrument.
b. an undertaking to pay, which must be more than acknowledgment of an existing debt.
c. more important under Revised Article 3 than under the prior Article 3.
d. an order or promise to pay only out of a particular fund.
What sort of liability does an accountant have under the Securities Exchange Act of
1934?
a. Civil liability where there is scienter.
b. Criminal liability where there is a willful violation.
c. All of these are correct.
d. None of these are correct.
A business form devised to avoid the burdens of corporate regulation, particularly the
formerly widespread prohibition denying corporations the power to own and deal in
real estate, and used primarily for asset securitization ventures is the:
a. limited liability limited partnership.
b. limited partnership.
c. limited liability company.
d. business trust.
Which one of the following is NOT true of a suit brought under criminal law?
a. It must be brought by the government.
b. It may be a state or a federal case.
c. Proof of guilt must be “by preponderance of the evidence.”
d. Conviction may result in imprisonment.
Intellectual property consists of which of the following?
a. Trade secrets.
b. Patents.
c. Trade symbols.
d. All of the above.
Shannon has just become a partner in A & R Accounting Partnership. Her capital
contribution is $10,000, which she paid from her savings. Which of the following is
correct with respect to Shannon’s liability for partnership obligations?
a. Shannon has no liability for partnership debts that existed at the time of her
admission as a partner.
b. Shannon is liable only to the extent of her capital contribution for partnership debts
that occur after her admission as a partner.
c. Shannon has unlimited personal liability for all partnership debts regardless of
whether they were incurred before or after she became a partner.
d. Shannon has unlimited personal liability for all partnership obligations that occur
after she became a partner; she has liability to the extent of her capital contribution for
obligations that existed at the time she became a partner.
The provisions of Section 17(a) of the 1933 Act:
a. primarily allows for a private right of action for persons injured by the act.
b. make it unlawful to engage in any transaction, practice, or course of business that
operates as deceit upon the issuer.
c. make it unlawful in the offer or sale of any securities to obtain property by any
statement that omits a material fact without which the information is misleading.
d. None of the above.
Remedies for the Equal Pay Act would include:
a. recovery of future wages.
b. an award of non-liquidated damages.
c. enjoining the employer from further unlawful conduct.
d. employer fines.
A foreign company, partially owned by that foreign government, manufactures
televisions in the foreign country. The cost to the company for the manufacture of the
product is the equivalent of $60 in the U.S. Because of excess production, the firm
exports 50,000 sets to the United States where they are sold for $75 each. If the nearest
rival U.S.-made set sells for $85, the action of the foreign company:
a. constitutes price-fixing.
b. violates the WTO’s antidumping provisions.
c. violates the Sherman Act, because of the involvement of the foreign government in
the company.
d. appears to be legal.
A system for electronic funds transfers (EFT) in which machines are located in a
merchant’s store and are activated by the consumer’s identification card and code is:
a. POS.
b. RAM.
c. EFTA.
d. DOS.
The __________ of a partner may be cash, property, services rendered, a promissory
note, or an obligation to contribute cash or property or to perform services.
a. contribution
b. capital
c. assets
d. None of the above.
Sylvia draws a check on ABC Bank payable “to the order of Ann Smith.” Ann indorses
it and deposits it in her account at First Bank. First Bank is a:
a. drawee bank.
b. payee bank.
c. depositary bank.
d. payor bank.
Examples of unenforceable oral contracts are:
a. an oral promise to guarantee the additional duties of another.
b. an oral agreement to substitute different land for that described in the original
contract.
c. an oral agreement to extend an employee’s contract for six months to a total of two
years.
d. All of the above.
Sarah joined a religious cult while a student at college. Her father hired a
deprogrammer who spent several weeks with her, during which they occasionally went
on outings. After Sarah met with her boyfriend one weekend, she rejoined the cult and
sued her father and the deprogrammer for false imprisonment. In this case:
a. Sarah will win because this is clearly false imprisonment.
b. Sarah will lose because she had a reasonable means of escaping and voluntarily
consented to the confinement.
c. Sarah has committed the tort of abuse of process.
d. Sarah’s parents are guilty of intrusion but not of false imprisonment.
Audit working papers would include which of the following?
a. Records of accounting and auditing procedures and tests performed.
b. Information disclosed solely by the payee.
c. A collection of IRS rulings related to auditing in general.
d. Accountant fees accrued for the year from all accounts.
Fourteen-year-old Marsha bought $120 worth of video games and DVDs at a local
store, using her own money. Her parents insisted that she return the items and get her
money back. Which of the following is true?
a. If there is a conflict, the store’s return policy will override Marsha’s right of
disaffirmation.
b. In most jurisdictions, Marsha may get her money back only if she has not opened or
damaged the merchandise in any way.
c. In a majority of jurisdictions, Marsha may get her money back even if she cannot
return the merchandise.
d. In most jurisdictions, Marsha may get some of her money back but she must pay the
reasonable value of the goods if that differs from the contract price.
Which of the following statements is true of insurance policies?
a. The basic principles of contract law apply to insurance policies.
b. Insurance companies tend to standardize their policies.
c. Some states forbid standardization of insurance policies.
d. Both (a) and (b).
The Federal Consumer Credit Protection Act:
a. sets limits on garnishment proceedings.
b. requires creditors to disclose finance charges.
c. does not yet require disclosure on credit extension charges.
d. Both (a) and (b).
A title search does not involve examining prior transfers of and encumbrances to the
property.
An express trust may be found if the intent of the grantor to create a trust is
unmistakable.
Jennifer, who stole a check ‘payable to cash,’ cannot be a holder since she did not
receive possession by voluntary transfer.
Copyright protection lasts for the period of an author’s life plus an additional seventy
years.
Define appropriation and give an example.
When the buyer breaches a sales contract, if the difference between the contract price
and the market price will not place the seller in as good a position as performance
would have, then the seller may recover the lost profit.
Generally, only a public representative, such as the attorney general, may sue to stop a
public nuisance.
With respect to liability for improper dividends, a non-breaching director and an
innocent shareholder are both fully protected from any liability for repayment due to
their good faith.
Every registration filed with the SEC is held in confidence until the business permits
disclosure.