Accountants can be held liable for negligence in preparing unaudited financial
statements.
According to the Electronic Funds Transfer Act and Regulation E adopted by the
Federal Reserve Board, a bank can send unsolicited electronic funds transfer system
(EFTS) debit cards to a consumer only if the cards are not valid for use.
The earnings of a not-for-profit corporation are distributed among its members.
Treble damages cannot be sought by the government for the violation of antitrust laws.
Insurance is a form of coverage for loss that is initiated after the loss has occurred.
A surety is primarily liable for paying the principal debtor’s debt when it is due in a
surety arrangement.
An obligor can raise any personal defenses he or she may have directly against an
assignee.
Which of the following would violate the Double Jeopardy Clause?
A) The criminal act violates more than one jurisdiction, and each jurisdiction tries the
accused in turn.
B) A case reaches a hung jury in court, and the government reopens the case with a new
jury.
C) A person is tried for a case similar to one of which he was acquitted earlier.
D) The government reopens a case after new incriminating evidence is found against an
acquitted person.
________ refers to a rule issued by an administrative agency that has the force of law
and to which covered persons and businesses must adhere.
A) Interpretive rule
B) Rule of Law
C) Substantive rule
D) Operational code
A(n) ________ refers to a document that states the terms for converting an existing
business to an LLC (limited liability company).
A) articles of termination
B) operating agreement
C) articles of organization
D) agreement of conversion
Jeane signs a promissory note to pay $5,000 to Naresh. Naresh negotiates the
instrument and indorses it to Dolph. Dolph changes the payment amount to $50,000 and
negotiates the note to Nicholas. Nicholas indorses the note and negotiates it to Mack.
Nicholas and Mack are both unaware of Dolph’s alteration. At this point, who has
primary liability over the note?
A) Nicholas
B) Dolph
C) Naresh
D) Jeane
________ are made without the permission of the target company’s management.
A) Merger offers
B) Hostile tender offers
C) Share exchange offers
D) Share acquisition offers
If a lawyer fails to file a document with the court on time, causing his client’s case to be
dismissed, he would be liable for ________.
A) professional malpractice
B) intentional misrepresentation
C) tort of appropriation
D) breach of the duty of care
Which of the following is true of the Occupational Safety and Health Administration’s
(OSHA’s) general duty standard?
A) The standard needs to be established with each safety regulation.
B) It requires an employer to provide a working environment that does not result in
mental stress of the employee.
C) An employer is obliged to provide a work environment that is free from recognized
hazards.
D) OSHA has no say in safety violations of an employer as it is just a model act.
Which of the following is true of the Uniform Limited Liability Company Act?
A) It provides comprehensive laws for the formation of corporations.
B) It provides uniform laws for the dissolution of limited liability companies.
C) It is a state law that is uniform across the United States.
D) It governs the operation of proprietorships and LLPs.
Section 14(a) of the Securities Exchange Act gives the Securities and Exchange
Commission (SEC) the authority to regulate ________.
A) the formation of the board of directors of a corporation
B) mergers between two or more corporations
C) issues of shares by a corporation
D) the solicitation of proxies by a corporation
Larry, a merchant seller, contracted with Simon to buy welding equipment. The contract
stipulated that Larry would pick up the equipment from Simon’s warehouse on the 14th
day from the date of the contract. But Larry could not make the pick up on that date and
before he could do so on the 15th day, the warehouse was burned down by miscreants.
In this situation, who bears the risk of loss of the goods that were to be received by
Larry?
A) The risk of loss lies with Larry for delaying the pick up.
B) The risk of loss lies with Simon for not protecting the goods.
C) The risk of loss is equally shared by Larry and Simon.
D) The risk of loss is shifted to the persons responsible for the fire.
An express agency agreement that is often used to give an agent the control to sign
legal documents on behalf of the principal is known as a(n) ________.
A) assignment
B) accommodation
C) power of attorney
D) letter of credit
The ________ protects the decisions of a board of directors that acts on an informed
basis, in good faith, and in the honest belief that the action taken was in the best
interests of the corporation and its shareholders.
A) Williams Act
B) antifraud provision of the Securities and Exchange Commission
C) pro rata rule
D) business judgment rule