1) Delaney is an accountant charged with negligence by Estimation & Valuation
Services Inc., a client. Delaney may successfully defend against the claim if he can
show that
a.scienter was lacking.
b.he complied with all International Financial Reporting Standards.
c.the negligence was not the proximate cause of the client′s losses.
d.the negligence was only contributory.
2) Mario chooses a personal representative to deal with his real estate, bank accounts,
and investments after his death. Mario should also choose an online executor. An online
executor is responsible for dealing with a decedent’s
a.all of the choices.
b.e-mail addresses.
c.social media profiles.
d.blogs.
3) Fact Pattern 37-1B
Bryn, Cornell, and Duke are general partners in Equity Lending, a consumer credit,
mortgage, and investment firm. Their agreement states that it is a breach of the
agreement for any partner to assign his or her interest to a creditor without the consent
of the other partners.
Refer to Fact Pattern 37-1B. Bryn, Cornell, and Duke decide to admit Giselle as a new
partner in Equity Lending. Giselle’s liability for partnership debts incurred before her
admission is
a.limited to her capital contribution to the firm.
b.limited to her personal assets.
c.nothing.
d.unlimited.
4) Georgebuys from Haul-U Corporation the exclusive right to use the Haul-U
trademark and sell and lease Haul-U-brand productsin a certain area. Their franchise
agreement requires George to pay certain administrative expenses. Their agreement
may also require George to pay a percentage of the franchisor’s
a.advertising costs.
b.personal expenses.
c.retirement income.
d.none of the choices.
5) Nature’s Products, Inc., sends its standard order form to Omni Distribution
Corporation to evidence a sale of packing materials. Omni responds with its own
standard purchase order form. Additional terms in the purchase order automatically
become part of the contract unless
a.the terms materially alter the original contract.
b.the original offer expressly required acceptance of its terms.
c.the offeror objects to the new terms within a reasonable time.
d.any of the choices.
6) Korean Hot Dogs Inc. offers entrepreneurs the opportunity to operate a franchise
under the Korean Hot Dogs trade name as a member of a select group of dealers that
engage in retail fast food sales. To potential investors, the franchisor must provide
a.actual earnings figures.
b.hypothetical earnings figures.
c.projected earnings figures.
d.none of the choices.
7) Best Silo Storage applies for a business loan from County Credit Union. To help Best
Silo get the loan so that it will be able to stay in business and fulfill a deal it has made
with her, Dakota promises the credit union’s loan officer that she will repay the loan if
Best Silo does not. To be enforceable, Dakota’s promise
a.need not be in writing.
b.must be in writing because it benefits Best Silo.
c.must be in writing because the credit union is not a party to the other deal.
d.must be in writing because it benefits Dakota.
8) Organicos Caf© orders five gallons of PureMaid-brand transfat-free olive oil from
Quico Cooking Supplies, Inc. Quico mistakenly ships soy oil, which Organicos keeps,
despite the nonconformity. The oil is destroyed in a fire. The loss is suffered by
a.all of the parties as tenants in common in equal measure.
b.PureMaid.
c.Organicos Caf©.
d.Quico Cooking Supplies.
9) Chord Guitars Inc. sells guitars and other stringed instruments to consumers. A
Chord salesperson says to a potential customer, “This Chord is the best guitar you’ll find
anywhere, even online.” This statement is
a.an implied warranty of fitness for a particular purpose.
b.an implied warranty of merchantability.
c.an express warranty.
d.none of the choices.
10) Round-Up Ranch and Smith & Jones, Accountants, are limited liability partnerships
(LLPs). The major features of an LLP are that it limits the personal liability of the
partners and
a.it allows the partnership to continue as a pass-through tax entity.
b.LLP statutes do not vary from state to state.
c.it can only do business in the state in which it was formed.
d.only a few states have enacted LLP statutes.
11) Transworld Import Company and USA Export, Inc., form a business organization to
engage in importing and exporting. Its property is held in the names of the members
and its shareholders have personal liability. This organization is
a. a business trust.
b. a joint stock company.
c. a joint venture.
d. a syndicate.
12) Rafi, a director of Super Service Station Corporation, does not attend a board meet-
ing for three years. During that time, Twyla, Super’s president, makes improper loans
that cost the company $100,000. Rafi is most likely
a.liable for negligence or mismanagement.
b.liable for violation of the business judgment rule.
c.not liable because missing meetings is an honest mistake.
d.not liable because missing meetings is only poor judgment.
13) A contract for a sale of goods priced at $501 must be in writing to be enforceable.
14) An instrument payable to two or more persons in the alternative requires the
indorsement of both payees for negotiation.
15) Check 21 requires banks to change their current check-collection practices.
16) A party who in good faith performs substantially all of the terms of a contract can
enforce the contract against the other party.
17) In an assignment, the party receiving the rights is the assignee.
18) An employer is charged with the knowledge of any dangerous condition discovered
by an employee and pertinent to the employment situation.
19) If the illegal part of a bargain has not yet been performed, the party rendering
performance must fulfill the contract before seeking damages.