Archives: Quiz

In the balance sheet the account Premium on Bonds Payable is a. added to Bonds Payable. b. deducted from Bonds Payable. c. classified as a stockholders’ equity account. d. classified as a revenue account. Answer: On January 1, Runner Corporation […]

Kill Corporation’s unadjusted trial balance includes the following balances (assume normal balances): Bad debts are estimated to be 6% of outstanding receivables. What amount of bad debt expense will the company record? a. $15,000 b. $36,000 c. $50,100 d. $51,000 […]

If a check correctly written and paid by the bank for $584 is incorrectly recorded on the company’s books for $548, the appropriate treatment on the bank reconciliation would be to a. deduct $36 from the book’s balance. b. add […]

A plant asset cost $288,000 and is estimated to have a $36,000 salvage value at the end of its 8-year useful life. The annual depreciation expense recorded for the third year using the double-declining-balance method would be a. $24,120. b. […]

Horizontal analysis evaluates a series of financial statement data over a period of time a. that has been arranged from the highest number to the lowest number. b. that has been arranged from the lowest number to the highest number. […]

Using the following information: During 2015, sales on account were $145,000 and collections on account were $100,000. Also during 2015, the company wrote off $4,000 in uncollectible accounts. An analysis of outstanding receivable accounts at year end indicated that uncollectible […]

Accrued expenses are a. paid and recorded in an asset account before they are used or consumed. b. paid and recorded in an asset account after they are used or consumed. c. incurred but not yet paid or recorded. d. […]

Which of the following receivables would not be classified as an “other receivable”? a. Advance to an employee b. Refundable income tax c. Notes receivable d. Interest receivable Answer: Effie Company uses a periodic inventory system. Details for the inventory […]

A cashier’s check is a draft drawn by a bank on another bank or payable through a bank. Answer: The bank is primarily liable on a cashier’s check. Answer: TRUE Federal inheritance taxes are imposed on a person who receives […]

A corporation as well as its subsidiaries can vote treasury shares. Answer: Under the Magnuson-Moss Warrant Act and the FTC regulations, the seller is not required to give a written warranty. Answer: TRUE “Imminently hazardous consumer products” are those that […]

As a general rule, performing a preexisting duty is not consideration. Answer: If the subject matter of a proposed contract is destroyed without the knowledge of either party after the making of an offer but before its acceptance, the offer […]

Since the Clayton Act deals with probable harms to competition, there is criminal liability for Clayton Act violations. Answer: If either party entering a contract lacks the capacity to contract, the contract is void or voidable. Answer: TRUE Horizontal (among […]

A patent generally is effective for 10 years from the date of filing. Answer: The courts have no power over unconscionable contracts. Answer: FALSE In a COD contract, the buyer may fully inspect the goods before accepting them. Answer: FALSE […]

The Parker Doctrine exempts many anticompetitive acts from the antitrust laws. Answer: A sole proprietorship and a partnership are taxable entities, but a corporation is not. Answer: FALSE If an offeree accepts the offer but complains about the terms of […]

Leroy writes a letter that said, “I agree to sell to Jay 5 modern art paintings” and he signs the letter. What happens according to the code if Jay is a merchant and he receives this writing from Leroy and […]

The Consumer Product Safety Commission’s authority is applicable to ___. A. firearms B. drugs C. cosmetics D. lawn mowers Answer: A bankrupt debtor: A. can elect to use the set of exemptions provided by either the state or federal bankruptcy […]

Harold makes an oral agreement to purchase Tina’s boat for $700. Under the UCC: A. the contract is voidable. B. the contract is barred by promissory estoppel. C. the agreement is barred by the statute of frauds. D. the contract […]

Eloise took her prized poodle, Tiny, to Pam’s Pet Store & Grooming to prepare Tiny for an upcoming dog show. Unknowingly, one of Pam’s new employees sold the dog to Jas. Under these circumstances, which of the following statements is […]

Regulatory statutes are designed primarily to: A. raise money. B. protect the public. C. define a public employee’s personal interests and public duties. D. provide the legal system with a degree of healthy flexibility. Answer: Which of the following statements […]

A restraint that is merely ancillary to a contract may be legal if it is: A. designed to protect interests created by the contract. B. broader than reasonably necessary to protect the interests created by the contract. C. solely designed […]

The Age Discrimination in Employment Act (ADEA) is enforced by the EEOC. Answer: Under which of the following conditions would a shareholder be liable to the corporation or its creditors? A. If he/she buys stock that was fully paid for […]

Under the UCC, when acceptance is made expressly conditional on agreement to new terms and the parties begin performance: A. a contract is created. B. no contract is created. C. only a written stipulation will make the contract enforceable. D. […]

Which of the following statements about an exclusive agency listing is TRUE? A. The broker has the exclusive right to sell the property and entitles him/her to a commission no matter who procured the buyer. B. The broker operating under […]

Which of the following authorities requires that, at minimum, the terms of the offer must be sufficiently clear so that what was promised can be determined? A. The UCC only. B. The common law and the Restatement. C. The UCC […]

In the United States, the copyright period for works for hires: A. is 110 years from the first publication or 140 years from creation, whichever comes first. B. lasts for the life of the author plus 70 years. C. is […]

Discuss the product safety standards issued by the Consumer Product Safety Act (CPSA). Also, list at least three products which, although consumer goods, do not come under the authority of CPSA. Answer: Which of the following is an electronic funds […]

According to the CISG, an offer: A. must be directed to a specific person. B. must express the quality of the goods to be valid. C. is not valid, if it impliedly provides means of determining the quantity of the […]

Administrative agencies: A. rarely have both the power to issue regulations and the power to investigate when such regulations have been violated. B. may make regulations that are advisory in nature, but cannot make regulations that have the force of […]

Christy downloaded a music software program from the Internet. Under the UCC, the software is: A. a good. B. a service. C. a good faith warranty. D. a mixture of goods and services. Answer: Advocates for socially responsible corporations sometimes […]

The “fair use” defense against copyright infringement: A. does not apply if the use enhances the value or marketability of the original work. B. applies if there are substantial differences between the copyrighted work and the derivative work. C. applies […]

The cap on monetary damages statute holds that the maximum liability that may be imposed on directors: A. is the greater of $100,000 or the amount of cash compensation that the director received from the corporation during the previous 24 […]

The Sherman Act: A. makes contracts in restraint of trade and monopolization illegal. B. does not provide criminal penalties for violations of its provisions. C. does not give the federal courts any injunctive powers. D. was specifically designed to attack […]

Oral contracts that come under the provisions of the statute of frauds are: A. void. B. illegal. C. unenforceable. D. valid. Answer: An acceptance is effective as soon as it is dispatched: A. if the offeree uses only an authorized […]

If someone signs a person’s name to a negotiable instrument without that person’s authorization, the signature binds the person whose name appears. Answer: Generally, businesses start out as publicly traded corporations. Answer: FALSE The Securities Act of 1933 is concerned […]

In exclusive dealing contracts, the UCC says that sellers have a duty to use their best efforts to supply their buyers, who in turn have a duty to use their best efforts to sell the goods. Answer: In cases of […]

A surety could avoid liability for a principal’s default by using the principal’s bankruptcy as a defense. Answer: Ralph and Ann engaged Sue, a realtor, to sell their variety store. Sue represented to buyer Mike that “this was a typical […]

A party who has waived rights to a portion of the contract not yet performed may retract the waiver. Answer: The party asserting the work product privilege bears the burden of establishing that the documents he seeks to protect were […]

A promisor who renders performance to the assignor without notice of the assignment still bears liability under the contract. Answer: An oral license for the temporary use of another’s land is enforceable. Answer: TRUE Many courts allow a third party […]

If an event must occur before a party’s duty to perform arises, it is called a condition precedent. Answer: A bearer instrument can be validly negotiated and transferred without indorsement. Answer: TRUE An individual who joins an existing partnership has […]

The partnership will not be liable for contracts created by a partner acting outside the scope of her authority, even when the other partners ratify the unauthorized action. Answer: According to Joseph L. Badaracco Jr., the question “Which alternative best […]

In which of the following cases is a proportion of the observations of a sample used in estimating the confidence interval? A) when the degrees of freedom are too large B) when a true sampling distribution cannot be estimated C) […]

What is the slope of the sales function D = a -bP? A) 4 B) 9 C) 12 D) 17 Answer: Qualis Investments is a private limited business that manages personal financial portfolios. The company manages six mutual funds and […]

Following is an extract from the Employee Payroll Database of HFR Informatics Inc. What is the relative frequency of Grade 3 employees? A) 4 B) 0.55 C) 0.20 D) 5 Answer: Problem statements such as the amount of material used […]

For a simple linear regression model, significance of regression is: A) a measure of how well the regression line fits the data. B) a hypothesis test of whether the true regression coefficient 1 is zero. C) a statistic that modifies […]

The World Intellectual Property Organization defines intellectual property rights as ‘legal rights which result from intellectual activity in the industrial, scientific, literary, and artistic fields.’ a. True b. False Answer: In a global trade transaction, Dicky ships goods under a […]

Under the modern traditional theory, the sovereign may nationalize foreign-owned property only where: a. It is for a public purpose. b. The foreign firm that owned the property was operating it unprofitably. c. A communist government takes over the country. […]

International Sales Law: I. Is not uniform because of vast political, cultural, and historical differences. II. Is embodied in the Convention on the International Sale of Goods. Which of the following is correct? a. Both I and II. b. Neither […]

Free movement of people in the EU: a. Allows EU residents to travel, live, study and work in other EU member states. b. Is not subject to any limitations whatsoever. c. Still requires border controls between most member states. d. […]

The Four Freedoms include: a. Capital. b. People. c. Goods. d. All of the above. Answer: The European Parliament has criticized the European Commission for its flexible approach in the granting of block exemptions from normal competition rules for vertical […]

The impact of piracy on the revenue loss as estimated by the Motion Picture Association of America is approximately $1.5 billion per year. a. True b. False Answer: California Agricultural Aircraft Services, Inc. (CAAS) is a California corporation headquartered in […]