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Wiley CPA REG 2014 > Business Law 2 > Flashcards

Business Law 2 Flashcards

1
Q

What does the acronym PBGC stand for?

A

Pension Benefit Guaranty Corporation.

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2
Q

What is the purpose of pension and retirement plan liability?

A

Pension and retirement plan liability protects plans by establishing standards of responsibility and conduct upon plan fiduciaries.

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3
Q

What is the purpose of the Employee Retirement Income Security Act of 1974 (ERISA)?

A
  1. Protect employee rights in existing pension plans; 2. Offer tax incentives to employers and employees to fund employee benefit plans.
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4
Q

List the two types of plans to which the Employee Retirement Income Security Act of 1974 (ERISA) apply.

A
  1. Employee pension benefit plans; 2. Employee welfare benefit plans.
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5
Q

Define “defined-contribution plans”.

A

Plans that specify annual fixed-share contributions to be made by an employer into a retirement account.

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6
Q

Define “defined-benefit plans”.

A

Plans that ensure eligible employees and their beneficiaries a specified monthly income for life.

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7
Q

What are the duties of a fiduciary?

A

Act with reasonable care and discharge duties solely in interests of plan’s participants.

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8
Q

What does the acronym COBRA stand for?

A

Consolidated Budget Reconciliation Act.

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9
Q

What is the purpose of the Occupational Safety and Health Act of 1970?

A

To promote safety standards and job safety.

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10
Q

Distinguish between mandatory and elective coverage of workers’ compensation benefits.

A

Most states require all employers to carry workers’ compensation plans. In some states it is elective, however, those who elect not to carry benefits can be sued by injured employees.

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11
Q

What two qualifying events give rise to health coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA)?

A

Termination or Reduction of hours causing loss of health insurance.

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12
Q

What is the purpose of the Workers’ Compensation Act?

A

To provide nearly-automatic compensation for employees who suffer work-related injuries or diseases.

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13
Q

What amount of leave is an eligible employee entitled to under the Family and Medical Leave Act of 1993?

A

12 weeks of unpaid leave without losing the job.

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14
Q

Define “quid pro quo”.

A

The concept of getting something of value in return for giving something of value. For a contract to be binding, it usually must involve the exchange of something of value.

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15
Q

List the employers who are exempt from Occupational Safety and Health Act of 1970 regulations.

A

Federal government, State government, Certain industries subject to other safety regulations.

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16
Q

What does the acronym OSHA stand for?

A

Occupational Safety and Health Act of 1970

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17
Q

What are the requirements for an employee to be eligible for the benefits outlined in the Family and Medical Leave Act (FMLA)?

A

Employee must have worked for employer: At least 12 months; AND at least 1250 hours in those months.

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18
Q

What entities are covered by the Family and Medical Leave Act (FMLA)?

A
  1. Employers with over 50 employees in a 75 mile radius; 2. State and local government agencies.
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19
Q

To whom does the Consolidated Omnibus Budget Reconciliation Act (COBRA) apply?

A

Companies with 20 or more employees.

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20
Q

Define “lock-out”.

A

Action taken by employers to bar workers from coming to work, sometimes in anticipation of a threatened strike.

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21
Q

List the worker’s rights protected by the National Labor Relations Act.

A

Right to form a union; Right to collectively bargain; Right to act collectively (strike).

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22
Q

What Act is known as the Taft-Hartley Act, named after its sponsors, Senator Robert Taft and Representative Fred A. Hartley, Jr.?

A

The Labor-Management Relations Act of 1947.

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23
Q

Define “agency shops”.

A

Agreements allowing employees not to join the union but to pay fees to cover union services.

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24
Q

List actions that are deemed union unfair labor practices.

A

Coercing employees; Requiring employees not to do business with nonunion companies; Refusing to bargain collectively in good faith; Illegal strike or secondary boycott.

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25
Q

List actions that are deemed employer unfair labor practices.

A

Interfering with organizing activity; Bribing workers; Threatening workers; Refusing to bargain collectively in good faith; Dominating union; Discriminating against union members.

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26
Q

What percentage of employees must sign authorization cards to enable a union to seek certification?

A

30%.

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27
Q

What Act prohibits court injunctions against many union organizing activities, particularly peaceful strikes?

A

The Norris-LaGuardia Act.

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28
Q

Define “collective bargaining”.

A

Negotiations between management and a union.

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29
Q

List actions that are deemed unfair labor practices.

A

Coercing employees; Requiring employees not to do business with nonunion companies; Refusing to bargain collectively in good faith; Illegal strike or secondary boycott.

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30
Q

What Act is known as the Landrum-Griffin Act?

A

The Labor-Management Reporting and Disclosure Act of 1959.

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31
Q

What Act is known as the Wagner Act, named after its sponsor New York Senator Robert F. Wagner?

A

The National Labor Relations Act of 1935.

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32
Q

Define “market power”.

A

The ability to raise prices without losing most customers.

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33
Q

What is the main goal of antitrust laws?

A

To promote economic competition.

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34
Q

List some examples of antitrust statues.

A
  1. The Sherman Act (1890); 2. The Clayton Act (1914); 3. Federal Trade Commission Act (1914); 4. Robinson-Patman Act (1936);
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35
Q

Define “collusion”.

A

Activity that may be evidenced by communications between the parties, opportunity to conspire, uniformity of action, etc.

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36
Q

What activity is generally exempt from antitrust laws?

A

Labor union collective bargaining activity.

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37
Q

True or False: §1 of the Sherman Act bans contracts, combinations, or conspiracies in restraint of trade.

A

True. The Sherman Act bans these activities.

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38
Q

List the elements of copyright ability?

A

An expressive work must be Fixed in some tangible medium of expression; Creative; Original.

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39
Q

List the uses of material that may be protected against copyright infringement claims by the “fair use” defense.

A

Criticism; Comment; News reporting; Teaching; Scholarship; Research.

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40
Q

What protections are provided by copyrights?

A

They protect original works of authorship.

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41
Q

List the four types of intellectual property.

A

Copyright, Patent, Trademark, Trade Secret.

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42
Q

What is the length of a copyright protection?

A

Usual: Life of author + 70 years; Work for hire: shorter of 95 years from date of publication or 120 years from date of creation.

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43
Q

What purpose do copyrights serve?

A

They reward creative expression.

44
Q

List the subject matters that are patentable.

A

Processes; Machines; Products; Compositions of matter; Any improvement upon the above; New plant varieties.

45
Q

List the elements of patentability.

A

Patentable subject matter; Useful; Novel; Nonobvious.

46
Q

What is the length of a patent protection?

A

Utility patent: 20 years from filing; Design patent: 14 years from filing.

47
Q

Where are patents filed?

A

At U.S. Patent and Trademark Office (within one year of invention).

48
Q

What purpose does a patent serve?

A

The purpose is to encourage inventive activity.

49
Q

Define “patent”.

A

A government-granted exclusive right to make, use or sell an invention.

50
Q

List the key money laundering statutes.

A

Bank Secrecy Act of 1970; Money Laundering Control Act of 1986.

51
Q

Define “money laundering”.

A

The process by which one conceals the existence, illegal source, or illegal application of income and disguises that income to make it appear legitimate.

52
Q

List the two key prohibitions related to money laundering.

A

Transaction money laundering; Transportation money laundering.

53
Q

What is the maximum number of shareholders in a Subchapter S Corporation?

A

100 shareholders.

54
Q

Defined “limited liability partnership (LLP)”.

A

A partnership that protects partners from liability for other partners’ torts.

55
Q

What is the most common type of corporation form?

A

Most corporations are this type.

56
Q

Define “sole proprietorship”.

A

A single-owner business.

57
Q

Define “limited partnership”.

A

A partnership with at least one general partner and one limited partner.

58
Q

Define “joint venture”.

A

A one-shot general partnership.

59
Q

Define “corporation”.

A

An artificial legal entity whose owners typically enjoy limited liability.

60
Q

For what tort liabilities are partners in a limited liability partnership responsible?

A

Partners are liable for torts committed by themselves or those they supervise.

61
Q

Define “general partnership”.

A

An association of two or more persons to carry on as co-owners a business for profit.

62
Q

List the requirements for a Subchapter S corporation.

A

Domestic corporation; All shareholders consent; No more than 100 shareholders; All shareholders must be individuals estates or certain exempt organizations or trusts; and Only one class of stock.

63
Q

Define “Subchapter S Corporation”.

A

A form of corporation that eliminates double taxation if certain requirements are met.

64
Q

Define “limited liability limited partnership (LLLP)”.

A

A limited partnership where no partner need be generally liable.

65
Q

Define “limited liability company (LLC)”.

A

A company that allows owners to gain liability-limiting advantages of corporate form while enjoying single taxation.

66
Q

List the items generally required in articles of incorporation.

A

Name indicating a corporate form; Number of authorized shares; Address of registered office; Name of registered agent; Names and addresses of incorporators.

67
Q

List the conditions under which promoters may profit in deals with a corporation.

A

Informed approval by majority of owners; or Informed approval by majority of board.

68
Q

What formation forms do not require a formal filing?

A

Sole proprietorship; General partnership.

69
Q

List the steps in organizing a corporation.

A

File articles of incorporation with Secretary of State; Hold an organizational meeting; Draft and adopt by-laws; Obtain certificates of authority to do business.

70
Q

What is the rationale for “piercing the corporate veil?”

A

To prevent the corporate entity from being used to defeat public convenience, justify wrong, commit fraud, or protect crime.

71
Q

List the reasons for piercing the corporate veil.

A

Commingling of funds; Diversion of corporate assets to personal use; Failure to maintain corporate formalities; Failure to adequately capitalize.

72
Q

List the operating forms of a limited liability corporation (LLC).

A

Owner-managed; Manager-managed.

73
Q

Who is responsible for the operation of a sole proprietorship?

A

Sole proprietor makes all decisions.

74
Q

Describe the corporate triangle.

A

Shareholders elect directors who make broad policy and select officers who run things day-to-day.

75
Q

List the “extraordinary” actions that require general partnership unanimity to be approved.

A

Admitting a new partner; Assigning partnership property; Disposing of goodwill; Doing any act making it impossible to carry on ordinary business.

76
Q

What is meant by “piercing the corporate veil?”

A

Imposing personal liability upon shareholders under particular circumstances.

77
Q

Who is responsible for the operation of a general partnership?

A

All partners have equal vote, absent agreement to contrary.

78
Q

List the general causes for a “dissociation” of a general partnership.

A

Notice of a partner’s desire to dissolve; Death of a partner; Bankruptcy of a partner; Expulsion of a partner.

79
Q

What happens upon dissociation of a general partnership?

A

Either: That partner’s interest is bought out; or Partnership is wound up.

80
Q

List the categories of corporate dissolution.

A

Voluntary Involuntary by: Administratively by Secretary of State Judicially by courts, in: Actions by Attorney General; Actions by shareholders; Action by Creditors; Where judgments are unpaid.

81
Q

List the events that terminate a sole proprietorship.

A

When sole owner dies, retires, or sells the business.

82
Q

List the major protections of shareholders in an organic change.

A

Procedures requiring director and shareholder approval; Appraisal rights.

83
Q

How is a partner’s account balance in a partnership determined?

A

Contribution + share of profits - share of liabilities = account balance.

84
Q

What test should be met before corporate shares are issued?

A

Quality Tests; Quantity Tests.

85
Q

How do partners share profits and losses?

A

Equally (absent agreement to the contrary).

86
Q

List the instances when corporate distributions are considered illicit.

A

If they render corporation: Equity insolvent; or Bankruptcy insolvent.

87
Q

List the items for which partners are reimbursed.

A

Payments made for partnership; Liabilities incurred on behalf of partnership; Advances made beyond agreed contribution.

88
Q

Who authorizes corporate distributions?

A

Board of directors, not shareholders.

89
Q

Define “watered stock”.

A

Stock issues for less than par value or less than amount authorized by board.

90
Q

List the basic corporate shareholder rights.

A

To vote for directors; To properly inspect corporate records; To have financial priorities respected; To exercise appraisal rights; To file derivative lawsuits; To exercise preemptive rights.

91
Q

List the duties of directors and officers of a corporation.

A

Duty of attention; Duty of care; Duty of loyalty.

92
Q

Describe the concept of “delectus personae.”

A

General partners may veto others’ attempt to join as new partners.

93
Q

What is the condition under which general partners may use partnership property?

A

Only for partnership purposes.

94
Q

What are the management rights of a partner in a general partnership?

A

The right to share equally in management.

95
Q

List the duties that partners owe each other.

A

Duty of Loyalty; Duty of Care.

96
Q

What actions are available to creditors of individual partners?

A

Creditors may get a judicial charging order, but not seize partnership property.

97
Q

What is a partner’s right to payment?

A

A partner is generally not entitled to be paid for work for the partnership.

98
Q

Describe the business judgment rule.

A

Courts’ refusal to second guess decisions of directors absent showing of bad faith or gross abuse of discretion.

99
Q

List the conditions under which a partnership may still be bound if a partner acts without authority.

A

Apparent authority existed; or Partnership ratifies the act.

100
Q

Describe the corporate pyramid.

A

Shareholders elect directors who set the broad policies of the firm and select officers who run the business day-to-day.

101
Q

What entity is responsible for the business and affairs of a corporation?

A

Board of Directors.

102
Q

Under what condition is a partnership generally liable for the partners’ torts?

A

Torts are committed within the scope of employment or authority.

103
Q

True or false: The basis of general partnership authority is based on agency law.

A

True. It is based on Agency law.

104
Q

List the major organic changes of a corporation that require shareholder approval.

A

Sale of major corporate assets; Mergers or consolidations; Dissolution; Amendments to articles of incorporation.

105
Q

List the actions included under the authority of a Director on the Board of Directors.

A

Borrowing money; Selling corporate; Hiring and firing officers; Declaring dividends; Making other distributions; Setting salaries of employees and themselves; Proposing major organic changes for shareholder approval.

Wiley CPA REG 2014 (4 decks)

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