Business Law Practice Exam (Intermediate Level) Part- III

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  • 1/100 Questions

    Superior powers is a corporation. Superior’s implied powers enable it to:

    • Amend the articles of incorporations
    • Bring a derivative suit
    • Declare dividends
    • Perform all acts reasonably appropriate and necessary to accomplish its corporate purposes
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About This Quiz

This intermediate-level exam in Business Law, Part-III, focuses on secured transactions. It assesses understanding of secured transactions, collateral, financing statements, and the sale of collateral. Essential for learners aiming to grasp the intricacies of business law.

Business Law Practice Exam (Intermediate Level) Part- III - Quiz

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  • 2. 

    Mari buys 500 shares of common stock in N.L.T. As a shareholder of record, Mari owns a proportionate interest in terms of:

    • Control, earnings and net assets

    • Control only

    • Earnings and net assets

    • Neither control nor earnings and net assets

    Correct Answer
    A. Control, earnings and net assets
    Explanation
    As a shareholder of record, Mari owns a proportionate interest in terms of control, earnings, and net assets. This means that Mari has a say in the decision-making process of the company (control), is entitled to a portion of the company's profits (earnings), and has a claim on the company's assets (net assets).

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  • 3. 

    Dee, an accountant, does not work for Emergent Company, but wrongfully obtains inside information concerning Emergent. Based on the information, Dee buys and sells Emergent stock for personal gain. The Securities and Exchange Commission prosecutes Dee, arguing that she is liable because she stole information rightfully belonging to another. This argument is

    • The blue sky theory

    • The misappropriation theory

    • The red-herring theory

    • The tipper/tippee theory

    Correct Answer
    A. The misappropriation theory
    Explanation
    The misappropriation theory is the correct answer because it refers to the act of wrongfully obtaining and using confidential information for personal gain, even if the person obtaining the information does not have a fiduciary duty to the company. In this case, Dee, as an accountant, wrongfully obtained inside information about Emergent Company and used it to buy and sell their stock for personal gain. The Securities and Exchange Commission is prosecuting Dee based on the misappropriation theory, arguing that she stole information that rightfully belonged to another.

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  • 4. 

    To acquire the ownership of a mountain cabin by adverse possession, Cody must occupy the cabin exclusively, continuously, and peaceably for a specified period of time

    • In an, open, hostile, and adverse manner

    • Until the owner files a suit

    • Without the owner’s knowledge

    • With the state’s permission

    Correct Answer
    A. In an, open, hostile, and adverse manner
    Explanation
    Cody must occupy the mountain cabin in an open, hostile, and adverse manner in order to acquire ownership through adverse possession. This means that Cody must openly and visibly occupy the cabin, without the owner's permission, and in a manner that is hostile to the owner's rights. Cody must also occupy the cabin continuously and exclusively for a specified period of time, until the owner files a suit. The state's permission is not required for adverse possession.

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  • 5. 

    FACT PATTERN 23-2: Luann and Mace are partners in Networx, a computer peripherals firm.Refer to fact pattern 23-2. Luann signs a contract with Oleo Chips, a retail component supplier, apparently on Networx’s behalf. The contract is binding on:

    • Luann, Mace & Networx

    • Luann only

    • Networx only

    • Oleo only

    Correct Answer
    A. Luann, Mace & Networx
    Explanation
    Luann, Mace, and Networx are all bound by the contract with Oleo Chips. This is because Luann signed the contract apparently on behalf of Networx, indicating that she had the authority to bind the partnership. As partners in Networx, both Luann and Mace are responsible for the actions and obligations of the partnership, including contracts entered into by one partner on behalf of the partnership. Therefore, all three parties are bound by the contract.

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  • 6. 

    Fact Pattern 26-2 Sid a director of Tech Software Company learned that Sid a Tech engineer has developed a new exciting video game.  Sid buys tech stock and tells his friend Uri who also buys tech stock.  When the new game is released three weeks later, Sid and Uri sell their stock for a big profit. Refer to fact pattern 26-2, Regarding Sid’s profits on the purchase and sale of tech stock under section 16(b) of the Securities Exchange Act of 1934, Tech may recapture

    • All of Sid’s profits

    • Half of Sid’s profits

    • 10% of Sid’s profits

    • None of Sid’s profits

    Correct Answer
    A. All of Sid’s profits
    Explanation
    Under section 16(b) of the Securities Exchange Act of 1934, Tech may recapture all of Sid's profits. This is because section 16(b) requires insiders, such as directors, to disgorge any profits made from buying and selling company stock within a six-month period. In this case, Sid bought the tech stock and sold it for a big profit within three weeks, making him an insider who is subject to the provisions of section 16(b). Therefore, Tech has the right to recapture all of Sid's profits.

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  • 7. 

    The payment of Brian’s debt to Chuck is guaranteed by Bryan’s personal property.This is

    • A reorganization

    • A secured transaction

    • A suretyship

    • A violation of most state laws

    Correct Answer
    A. A secured transaction
    Explanation
    The correct answer is a secured transaction. In a secured transaction, the debtor provides collateral to the creditor as a guarantee for the payment of the debt. In this case, Brian's debt to Chuck is guaranteed by Bryan's personal property, indicating that there is a security interest in place. This means that if Brian fails to repay the debt, Chuck can take possession of Bryan's personal property to satisfy the debt.

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  • 8. 

    Seth files for bankruptcy. Seth must include with the petition

    • Proof of each creditor's claim

    • A list of creditors and the amount of debt owed to each

    • All of his debt and credit cards to be disposed of by the court

    • An affidavit testifying to have read the bankruptcy code

    Correct Answer
    A. A list of creditors and the amount of debt owed to each
    Explanation
    When filing for bankruptcy, it is necessary for Seth to include a list of creditors and the amount of debt owed to each. This is important because it allows the court to have a clear understanding of Seth's financial obligations and helps in the process of determining how the debts will be handled during the bankruptcy proceedings. Including this information ensures transparency and provides a comprehensive overview of Seth's financial situation to the court.

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  • 9. 

    Denise borrows $90,000 from Clear Lake Credit Union to buy a home. Denise loses her job and fails to make payments, but assures Clear Lake Union that she will secure a new job. The lender agrees to postpone the payments. This is

    • A bridge loan

    • Forbearance

    • A renoitization

    • Restructure

    Correct Answer
    A. Forbearance
    Explanation
    Forbearance is the correct answer because it refers to an agreement between a borrower and a lender where the lender agrees to temporarily suspend or reduce the borrower's monthly payments due to financial hardship. In this case, Denise lost her job and was unable to make payments, but the lender agreed to postpone the payments until she secured a new job. This demonstrates forbearance as the lender is showing leniency and understanding towards Denise's situation.

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  • 10. 

    Carl sells Direct Marketing Enterprises, a sole proprietorship, to Eve. This a transfer of

    • A license

    • A trade name

    • The formula to make a product

    • The ownership of the business

    Correct Answer
    A. The ownership of the business
    Explanation
    The transfer of Direct Marketing Enterprises from Carl to Eve implies a transfer of ownership of the business. This means that Carl is selling his rights, assets, and liabilities associated with the business to Eve, making her the new owner of the sole proprietorship.

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  • 11. 

    Felipe is a member of Great States Transportation LLC. Felipe’s relationship to Great States ends, but the firm continues to do business. This is

    • Dissociation

    • Dissolution

    • Winding Up

    • Wrongful

    Correct Answer
    A. Dissociation
    Explanation
    Dissociation is the correct answer because it refers to the situation where a member of a limited liability company (LLC) leaves or has their relationship with the company terminated, but the LLC continues to operate and conduct business. In this scenario, Felipe's relationship with Great States Transportation LLC ends, but the company itself continues to function and carry out its operations.

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  • 12. 

    Felicity and Gideon want to form and do business as Home Healthcare Corporation. A corporation is

    • A natural being

    • A tangible thing

    • An artificial person

    • A visible radiance

    Correct Answer
    A. An artificial person
    Explanation
    A corporation is considered an artificial person because it is a legal entity separate from its owners or shareholders. It has its own rights, obligations, and liabilities, just like a natural person. This legal concept allows corporations to enter into contracts, own property, sue or be sued, and engage in various business activities. While a corporation is not a tangible thing or a visible radiance, it exists in the legal realm as a distinct entity, capable of conducting business and being held accountable under the law.

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  • 13. 

    Zero Sums Game Corporation has 43 shareholder. The minimum number that must be present at a meeting for a shareholders vote is

    • All of the shareholders

    • A quorum

    • A proxy

    • Three of the shareholders

    Correct Answer
    A. A quorum
    Explanation
    A quorum is the minimum number of members required to be present at a meeting in order to conduct official business. In this case, since Zero Sums Game Corporation has 43 shareholders, the minimum number required for a shareholder vote would be a quorum. This means that not all shareholders need to be present, but rather a specific number that is determined by the company's bylaws or governing documents.

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  • 14. 

    Clark is a shareholder of Bedrest Mattress Company. Clark will be deemed to have fiduciary duty to Bed rest and its minority shareholders if he has

    • Preferred stock

    • A right of first refusal

    • A sufficient number of shares to exercise de facto control

    • Watered stock

    Correct Answer
    A. A sufficient number of shares to exercise de facto control
    Explanation
    If Clark has a sufficient number of shares to exercise de facto control, it means that he holds enough shares to have significant influence over the company's decisions and operations. This would imply that he has a higher level of responsibility towards the company and its minority shareholders, as he has the power to make important decisions that can affect their interests. Therefore, Clark would be deemed to have fiduciary duty to Bedrest and its minority shareholders in this scenario.

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  • 15. 

    Heavy Hauling, Inc. is a public company whose shares are traded in the public securities markets. Under the Sarbanes-Oxley Act of 2002, to ensure that Heavy Hauling’s financial results are accurate and timely, the firm’s senior officers must set up and maintain

    • Internal “disclosure controls and procedures”

    • External “release and reveal timetables”

    • Personal “peruse and review liability policies”

    • Public “information and discussion forums”

    Correct Answer
    A. Internal “disclosure controls and procedures”
    Explanation
    The correct answer is internal "disclosure controls and procedures". Under the Sarbanes-Oxley Act of 2002, public companies like Heavy Hauling, Inc. are required to establish and maintain effective internal controls over financial reporting. These controls are designed to ensure that the company's financial statements are accurate and reliable. Disclosure controls and procedures refer to the processes and systems that are put in place to ensure that all relevant information is properly disclosed to investors and regulatory authorities in a timely manner. This helps to promote transparency and accountability in the company's financial reporting.

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  • 16. 

    Lucky owns Mud Flats Ranch, which is situated on certain Nevada acreage. The exterior boundaries of the land extend

    • 100 feet into the earth and 100 feet into the atmosphere

    • One mile into the earth and one mile into the atmosphere

    • To infinity and beyond

    • To the center of the earth and up to the farthest reaches of the atmosphere

    Correct Answer
    A. To the center of the earth and up to the farthest reaches of the atmosphere
    Explanation
    The correct answer is "to the center of the earth and up to the farthest reaches of the atmosphere." This means that Lucky owns the land from its deepest point in the earth's core to the highest point in the atmosphere. This implies that Lucky has complete ownership and control over the entire area, including both the surface and the space above and below it.

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  • 17. 

    Orin owns Pilot’s Landing Office Park. His ownership rights include the right to sell or give away the property without restriction, as well as the right to commit waste, if she chooses. Orin’s ownership interest is

    • A fee simple absolute

    • A leasehold estate

    • A life estate

    • The power of eminent domain

    Correct Answer
    A. A fee simple absolute
    Explanation
    Orin's ownership interest is a fee simple absolute. This means that Orin has complete and unrestricted ownership rights over the Pilot's Landing Office Park. He has the right to sell or give away the property as he wishes, and he also has the right to commit waste, which means he can use or abuse the property in any way he sees fit. A fee simple absolute is the highest form of ownership interest one can have in real property.

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  • 18. 

    Leslie, an accountant, enters into a contract to provide services to Marty. Leslie does not finish the work within the contracts deadline. Leslie is

    • Liable for breach of contract

    • Not liable, because Leslie is a professional

    • Not Liable because Leslie’s failure must have been Marty’s fault

    • Not Liable, because the work took longer than foreseen

    Correct Answer
    A. Liable for breach of contract
    Explanation
    Leslie, as an accountant, entered into a contract with Marty to provide services. However, Leslie failed to complete the work within the agreed-upon deadline. This constitutes a breach of contract, as Leslie did not fulfill their obligation within the specified timeframe. Being a professional does not exempt Leslie from liability in this situation, as professionals are still expected to fulfill their contractual obligations. Additionally, the fact that the work took longer than anticipated does not absolve Leslie of their responsibility to complete the work within the agreed-upon timeframe. Therefore, Leslie is liable for breach of contract.

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  • 19. 

    Filtration Products, Inc., files a suit against Emmett may be held liable

    • If Filtration cannot prove actual fraud

    • If Emmett was grossly negligent in the performance of his duties

    • Only if Emmett acted with fraudulent intent

    • Only if Emmett impersonated someone else who could be liable for fraud

    Correct Answer
    A. If Emmett was grossly negligent in the performance of his duties
    Explanation
    If Filtration Products, Inc. cannot prove actual fraud, they may still hold Emmett liable if he was grossly negligent in the performance of his duties. This means that if Emmett displayed a severe lack of care or competence in carrying out his responsibilities, he can be held accountable for any resulting damages or losses. The key factor here is the level of negligence, rather than intentional fraudulent behavior or impersonation.

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  • 20. 

    Grover Nut Company files a suit against Hud, its former accountant, alleging actual fraud. Grover must prove

    • Intent to deceive

    • Misrepresentation of a non-material fact

    • The lack of an injury

    • Unjustifiable reliance

    Correct Answer
    A. Intent to deceive
    Explanation
    To successfully prove actual fraud against Hud, Grover Nut Company needs to establish the intent to deceive on Hud's part. Intent to deceive means that Hud intentionally acted with the purpose of misleading or tricking Grover. This requires demonstrating that Hud had a conscious desire to deceive Grover and knowingly made false statements or engaged in deceptive conduct. Simply proving misrepresentation of a non-material fact, the lack of an injury, or unjustifiable reliance alone would not be sufficient to establish actual fraud.

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  • 21. 

    Mountain Mining Company, a U.S. firm, owns property in Bolivia. The government of Bolivia seizes the property for an illegal purpose without paying just compensation. This is

    • Confiscation

    • Defalcation

    • Dumping

    • Expropriation

    Correct Answer
    A. Confiscation
    Explanation
    The given scenario describes the government of Bolivia seizing the property of the U.S. firm, Mountain Mining Company, without providing any compensation. This action is referred to as confiscation, which is the act of taking someone's property without any legal authority or justification. It is different from defalcation, which refers to embezzlement or misappropriation of funds, and dumping, which refers to selling goods in a foreign market at a price lower than the cost of production. Expropriation, on the other hand, involves the government taking over private property for a public purpose but with compensation.

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  • 22. 

    Delite Candy Company hires Elton to sell Delite’s products in a certain area. Delite agrees to pay Elton a salary, plus commission, for a trial period. They also agree that Elton can sell using any methods and during any hours that seem appropriate. The key factor in whether Elton is Delite’s employee is

    • The amount of Eltons salary

    • The control Delite has over the Details of the work

    • The length of the trial period

    • The title that designates Elton’s position

    Correct Answer
    A. The control Delite has over the Details of the work
    Explanation
    The key factor in determining whether Elton is Delite's employee is the control that Delite has over the details of the work. This means that if Delite has the authority to dictate how and when Elton sells the products, then Elton would be considered an employee. The amount of salary, the length of the trial period, and the title are not the determining factors in this case.

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  • 23. 

    Bakri owns a house. In the house, on a tile floor is a throw rug. Most likely to meet the definition of a fixture is

    • The house

    • The throw rug

    • The tile floor

    • None of these choices

    Correct Answer
    A. The tile floor
    Explanation
    The tile floor is most likely to meet the definition of a fixture because fixtures are typically considered permanent attachments to a property. The tile floor is permanently attached to the house and is not easily removable, unlike the throw rug which can be easily taken out of the house. Therefore, the tile floor is the most likely choice to meet the definition of a fixture in this scenario.

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  • 24. 

    Agnes borrows $110,000 from Bay Harbor Bank to buy a home under a mortgage with an acceleration clause. After eighteen payments, Agnes stops making payments on the mortgage. Bay Harbor

    • Can foreclose once on the entire amount of the loan

    • May seek only the amount of the missed payments, not the entire loan

    • Must foreclose on small amounts over time as each payment comes due

    • Must notify Agnes to accelerate the steps to cure the default

    Correct Answer
    A. Can foreclose once on the entire amount of the loan
    Explanation
    The correct answer is "can foreclose once on the entire amount of the loan" because the mortgage has an acceleration clause. This clause allows the lender to demand immediate payment of the entire loan if the borrower defaults on the mortgage. Since Agnes has stopped making payments, Bay Harbor Bank has the right to foreclose on the entire amount of the loan. They do not have to wait or foreclose on small amounts over time.

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  • 25. 

    Ozzy is an officer of Prudent Financial Corporation. Ozzy serves in a representative capacity for Prudent Financial’s owners. With respect to binding Prudent Financial to Contracts, Ozzy is

    • An agent and has the authority

    • An agent but does not have the authority

    • Not an agent and does not have the authority

    • Not an agent but does have the authority

    Correct Answer
    A. An agent and has the authority
    Explanation
    Ozzy is an agent of Prudent Financial Corporation because he serves in a representative capacity for the company's owners. As an agent, he has the authority to bind Prudent Financial to contracts.

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  • 26. 

    Ivy and Justin want to form and do business as Kayak Adventures Corporation. A corporation can be owned by

    • A natural person only

    • An artificial person only

    • Artificial or natural persons

    • Neither “artificial” or “natural” persons

    Correct Answer
    A. Artificial or natural persons
    Explanation
    A corporation can be owned by both artificial and natural persons. This means that individuals as well as other legal entities, such as other corporations or organizations, can have ownership in a corporation. This allows for a diverse range of ownership and investment opportunities in the corporation, promoting business growth and development.

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  • 27. 

    Naomi & Ogden are shareholders of MediCare Residences Inc. As shareholder’s, they must approve

    • Conducting a merger

    • Deciding to pursue new business opportunities

    • Terminating a managerial employee

    • Negotiating a contract between management and labor

    Correct Answer
    A. Conducting a merger
    Explanation
    As shareholders of MediCare Residences Inc., Naomi & Ogden have the authority to approve conducting a merger. This means that they have the power to agree to the company merging with another entity. This decision is significant as it can have a major impact on the company's future, including its financial stability, market position, and overall operations. Therefore, the shareholders' approval is necessary to proceed with such a strategic move.

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  • 28. 

    Bild-It-Rite Corporation is a public company that is preparing to issue securities that do not qualify for an exemption from registration. This means that Bild-It-Rite must

    • File a registration statement with the SEC

    • Issue the securities through an online registration site

    • Refrain from issuing the securities to unregistered investors

    • Register the securities with a national stock exchange

    Correct Answer
    A. File a registration statement with the SEC
    Explanation
    Bild-It-Rite Corporation is a public company that is preparing to issue securities that do not qualify for an exemption from registration. This means that Bild-It-Rite must file a registration statement with the SEC. This is because securities that do not qualify for an exemption from registration must be registered with the Securities and Exchange Commission (SEC) before they can be offered or sold to the public. By filing a registration statement with the SEC, Bild-It-Rite ensures that it complies with the necessary regulations and provides potential investors with the required information about the securities being offered.

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  • 29. 

    Maple Products Corporation is a public company, which New Hampshire regulates and in which Orin invests. The Sarbanes-Oxley-Act of 2002 introduced direct federal corporate governance requirements to

    • Public companies

    • Private investors

    • State regulators

    • None of these choices

    Correct Answer
    A. Public companies
    Explanation
    The Sarbanes-Oxley Act of 2002 introduced direct federal corporate governance requirements to public companies. This means that the Act imposes regulations and standards specifically on publicly traded companies like Maple Products Corporation. It does not apply to private investors or state regulators, as they are not subject to the same level of federal oversight and regulations. Therefore, the correct answer is public companies.

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  • 30. 

    Jamal signs a lease with Kelvin to occupy a house on Leech lake in Minnesota for the summer. Jamal’s tenancy is

    • A fixed-term tenancy

    • A periodic tenancy

    • A restrictive covenant

    • A tenancy at will

    Correct Answer
    A. A fixed-term tenancy
    Explanation
    Jamal's tenancy is a fixed-term tenancy because he signed a lease with Kelvin for a specific period of time, which is the summer. This means that Jamal has the right to occupy the house for the duration of the agreed-upon lease term, and Kelvin cannot terminate the tenancy before the end of the summer unless there is a breach of the lease agreement. This type of tenancy provides certainty and stability for both parties involved.

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  • 31. 

    Tiny is an accountant, Tiny’s violation of Generally Accepted Accounting Principles and Generally Accepted Auditing Standards

    • Does not indicate that Tiny was negligent

    • Is prima Facie evidence that Tiny was negligent

    • Precludes Tiny from raising any defense against negligent claim

    • Will never subject Tiny to liability

    Correct Answer
    A. Is prima Facie evidence that Tiny was negligent
    Explanation
    The given correct answer states that Tiny's violation of Generally Accepted Accounting Principles and Generally Accepted Auditing Standards is prima facie evidence that Tiny was negligent. This means that the violation itself serves as initial evidence or proof of negligence on Tiny's part. However, this does not necessarily mean that Tiny is automatically liable or that Tiny cannot raise any defense against a negligent claim. It simply suggests that the violation can be used as evidence to support a claim of negligence.

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  • 32. 

    Jamie, an accountant, contracts to perform services for Kase. Jamie acts in good faith and conforms to generally accepted accounting principles, but makes a mistake in judgement. Jamie is most likely

    • Liable if Jamie failed to discover a defalcation

    • Liable if Jamie failed to discover a fraud

    • Liable if Jamie failed to discover an impropriety

    • Not liable

    Correct Answer
    A. Not liable
    Explanation
    Jamie, as an accountant, has acted in good faith and followed generally accepted accounting principles. However, Jamie made a mistake in judgment. In this scenario, Jamie is not liable because making a mistake in judgment does not automatically make someone liable for any resulting consequences. Liability would typically arise if Jamie had acted negligently, breached a duty of care, or failed to fulfill professional responsibilities. Since Jamie acted in good faith and followed accepted principles, the mistake in judgment does not make Jamie liable.

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  • 33. 

    Fabiola, or any foreign citizen, can bring a civil suit in a U.S. court for

    • A violation of a treaty of the United States only

    • A violation of a treaty of the United States or of the law of nations

    • A violation of the law of nations only

    • No purpose

    Correct Answer
    A. A violation of a treaty of the United States or of the law of nations
    Explanation
    Foreign citizens, including Fabiola, have the right to bring a civil suit in a U.S. court for a violation of a treaty of the United States or of the law of nations. This means that if there is a breach of a treaty between the United States and another country, or if there is a violation of customary international law, Fabiola can seek legal recourse in a U.S. court. This allows foreign citizens to seek justice and protection under international law within the U.S. legal system.

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  • 34. 

    The United States taxes each barrel of imported oil at a flat rate. This is

    • An antidumping duty

    • A dumping duty

    • A quota

    • A tariff

    Correct Answer
    A. A tariff
    Explanation
    The correct answer is a tariff. A tariff is a tax imposed on imported goods, in this case, each barrel of imported oil. It is a common trade policy measure used by governments to protect domestic industries, regulate trade, and generate revenue. Unlike antidumping duties, which are specific to unfair trade practices, or quotas, which limit the quantity of imports, a flat rate tax on imported oil is best described as a tariff.

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  • 35. 

    The payment of Eden’s debt to Flem is guaranteed by Eden’s personal property.  This property is

    • A secured party

    • A secured transaction

    • A security interest

    • Collateral

    Correct Answer
    A. Collateral
    Explanation
    The correct answer is collateral because collateral refers to a valuable asset or property that is used to secure a loan or debt. In this case, Eden's personal property is being used as a guarantee for the payment of their debt to Flem. By using their personal property as collateral, Eden ensures that Flem has a form of security in case they fail to repay the debt.

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  • 36. 

    Reed borrows $150,000 dollars from Suburban Credit Union to buy a home, which secures the loan. Three years later, reed stops making payments. After suburban credit repossesses and auction off the property to Tyler equity remains. This amount most likely belongs to

    • Reed

    • Suburban credit union

    • Tyler

    • The equity in which the property is located

    Correct Answer
    A. Reed
    Explanation
    The correct answer is Reed because the question states that Reed borrowed the money from Suburban Credit Union and used the property as collateral for the loan. Therefore, any remaining equity after the property is auctioned off would belong to Reed.

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  • 37. 

    Elle is an agent for Fine Cosmetics, INC. Elle owes Fine Cosmetics the duty of

    • Avoidance

    • Cooperation

    • Indemnification

    • Performance

    Correct Answer
    A. Performance
    Explanation
    As an agent for Fine Cosmetics, INC, Elle is obligated to fulfill her duties and responsibilities towards the company. This includes carrying out her tasks and responsibilities to the best of her abilities, meeting performance expectations, and achieving the desired results. Performance is crucial for Elle as it ensures that she is actively working towards the success of Fine Cosmetics and fulfilling her obligations as their agent.

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  • 38. 

    Research statistics corporation uses a merit system to pay its employees according to their job performance. Suki, a female and Troy a male are research employees with comparable jobs. Due to superior performance Suki is paid more than Troy. This is

    • Disparate-impact treatment

    • Gender discrimination

    • Not discrimination

    • Reverse discrimination

    Correct Answer
    A. Not discrimination
    Explanation
    This situation is not discrimination because the employees are being paid based on their job performance, not their gender. Suki is being paid more than Troy because she has demonstrated superior performance, regardless of her gender. Discrimination would occur if Suki was being paid more than Troy solely because she is a female, without considering their job performance. However, in this case, the merit system is being used to determine pay, which is a fair and non-discriminatory approach.

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  • 39. 

    Dag is an employee of Eagle Mining company. Under federal labor law, dag and other employees have the right to

    • Bargain collectively with Eagle through their representatives

    • Insist that Eagle require union membership as a condition of work

    • Interfere with the efforts of others to form labor organizations

    • Refuse to bargain with Eagle through their representatives

    Correct Answer
    A. Bargain collectively with Eagle through their representatives
    Explanation
    Under federal labor law, employees have the right to bargain collectively with their employer through their representatives. This means that Dag and other employees have the right to negotiate and discuss work conditions, wages, and other employment terms with Eagle Mining company through their chosen representatives, such as a labor union. This allows employees to have a voice and be involved in the decision-making process that affects their working conditions.

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  • 40. 

    Jim organized, and owns and operates, Jim’s Landscaping Service in the simplest form of business organization. This is

    • None of the choices

    • A limited liability company

    • A partnership

    • A sole proprietorship

    Correct Answer
    A. A sole proprietorship
    Explanation
    The given answer is a sole proprietorship because the description states that Jim owns and operates the business. In a sole proprietorship, the owner has complete control and is solely responsible for the business. This form of business organization is the simplest and most common, where the owner has unlimited liability for the business's debts and obligations.

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  • 41. 

    Realty Company and Security Corp plan to consolidate. Most likely, the articles of incorporation will be filed with

    • County recording office

    • Local realtors association

    • State’s secretary of state

    • Federal Bureau of Land Management

    Correct Answer
    A. State’s secretary of state
    Explanation
    When a company plans to consolidate, the articles of incorporation, which outline the company's structure and purpose, need to be filed. This filing is typically done with the state's secretary of state. The secretary of state is responsible for maintaining corporate records and ensuring compliance with state laws. Therefore, it is most likely that the articles of incorporation for the consolidation of Realty Company and Security Corp will be filed with the state's secretary of state.

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  • 42. 

    Cohtton Products Corporation is a public company wose shares are traded in the public securities markets. The Securities Act of 1933 requires Cotton to disclose financial and other significant information concerning its securities in order to

    • Increase corporate accountability by imposing responsibility on chief corporate executives

    • Prevent insiders from trading among themselves

    • Protect investors

    • Provide a “safe harbor” for companies that make forward-looking statements

    Correct Answer
    A. Protect investors
    Explanation
    The Securities Act of 1933 requires Cotton Products Corporation to disclose financial and other significant information concerning its securities in order to protect investors. This is because by providing this information, investors can make informed decisions about whether to invest in the company or not. This disclosure requirement ensures transparency and reduces the risk of fraud or misleading information, ultimately safeguarding the interests of investors.

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  • 43. 

    RingTone Corporation is a public company whose securities are traded among investors. Under the Securities Act of 1933, a security is

    • Almost any stake in the ownership or debt of a company

    • An investment that is guaranteed to make a profit

    • Only such common forms of debt and equity as bonds and stocks

    • Whatever a company represents to the public as a security

    Correct Answer
    A. Almost any stake in the ownership or debt of a company
    Explanation
    The correct answer is "almost any stake in the ownership or debt of a company". This is because the Securities Act of 1933 defines a security as any kind of ownership interest or debt instrument issued by a company that can be bought, sold, or traded among investors. This includes stocks, bonds, options, and other types of financial instruments that represent an ownership stake or a debt obligation in a company.

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  • 44. 

    Grain from Harvest Farms is wrongfully commingled with grain from Idyllic Fields, which obtains possession of all of the grain. This is

    • A bailment

    • Accession

    • Confusion

    • Production

    Correct Answer
    A. Confusion
    Explanation
    Confusion is the correct answer because it refers to a situation where the goods of two or more parties are mixed together to an extent that they cannot be separated or identified. In this scenario, the grain from Harvest Farms and Idyllic Fields is wrongfully mixed together, and Idyllic Fields obtains possession of all the grain. This results in a state of confusion where it becomes impossible to distinguish the grain belonging to each party.

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  • 45. 

    Elsa, the owner of Fertile Farm, sells Gina a right to camp on Fertile land overnight. Gina’s right is

    • A leasehold estate

    • A license

    • An easement

    • A profit

    Correct Answer
    A. A license
    Explanation
    In this scenario, Gina is given the right to camp on Fertile Farm's land overnight. However, this right is not a permanent or exclusive right, but rather a temporary and revocable permission granted by Elsa, the owner of the land. This type of permission is known as a license. Unlike a leasehold estate, which grants exclusive possession for a specific duration, a license is a more limited and flexible arrangement. Similarly, an easement grants a specific right to use another person's property, but it typically involves a specific use or access rather than overnight camping. A profit, on the other hand, refers to the right to use or take something from another person's property, such as harvesting crops or mining minerals, which is not applicable in this scenario.

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  • 46. 

    Sherman dies without a will, survived by his granddaughter Roxy and Roxy’s brother Pio. Roxy and Pio are Sherman’s

    • Collateral heirs

    • Settlors

    • Trustees

    • Lineal descendants

    Correct Answer
    A. Lineal descendants
    Explanation
    Sherman's granddaughter Roxy and Roxy's brother Pio are referred to as lineal descendants. Lineal descendants are the direct blood relatives of an individual, such as children, grandchildren, or great-grandchildren. In this case, Roxy and Pio are Sherman's grandchildren, making them his lineal descendants. Since Sherman died without a will, Roxy and Pio may have a claim to his estate as his lineal descendants.

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  • 47. 

    The Association of Southeast Asian Nations is a regional trade association that was created through

    • A bilateral agreement

    • A lateral agreement

    • A multilateral agreement

    • A unilateral agreement

    Correct Answer
    A. A multilateral agreement
    Explanation
    The correct answer is a multilateral agreement. The Association of Southeast Asian Nations (ASEAN) was formed through a multilateral agreement, which means it involved multiple countries coming together and agreeing to establish the regional trade association. This agreement would have required negotiations and consensus among the member countries to create a framework for cooperation and economic integration within the region. A bilateral agreement refers to an agreement between two countries, while a lateral agreement and a unilateral agreement do not accurately describe the process of establishing ASEAN.

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  • 48. 

    LaDonna signs a one-year lease with Mae to occupy an apartment in Ames, Iowa, near the University of Iowa. LaDonna needs the apartment only for two semesters and may have to sublet it for the rest of the term

    • A periodic tenancy

    • A tenancy at will

    • A tenancy by the entirety

    • A fixed-term tenancy

    Correct Answer
    A. A fixed-term tenancy
    Explanation
    The correct answer is a fixed-term tenancy. A fixed-term tenancy is a lease agreement that has a specific start and end date. In this scenario, LaDonna signs a one-year lease, indicating a fixed-term agreement. This type of tenancy is suitable for LaDonna's situation because she only needs the apartment for two semesters, which is within the one-year fixed term. After the fixed term ends, LaDonna may have the option to sublet the apartment for the remaining duration of the lease.

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  • 49. 

    Shingle and Tile Roofing LLC, obtains an insurance policy against the liability for injuries or losses sustained by employees during the course of their employment. The policy covers claims not covered by workers’ compensation insurance. This is

    • Casualty insurance

    • Fidelity or guaranty insurance

    • Key-person life insurance

    • Employer’s liability insurance

    Correct Answer
    A. Employer’s liability insurance
    Explanation
    The correct answer is employer's liability insurance. This type of insurance provides coverage for injuries or losses sustained by employees during the course of their employment, specifically for claims that are not covered by workers' compensation insurance. It helps protect the employer from potential legal and financial liabilities related to workplace injuries or accidents.

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Quiz Review Timeline (Updated): May 28, 2024 +

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  • Current Version
  • May 28, 2024
    Quiz Edited by
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  • Dec 14, 2014
    Quiz Created by
    Chris_63

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