Business Law Flashcards
(129 cards)
1
Q
3 ways that an Accountant can charge Contingent fees for a tax client
A
- IRS Examination
- Where a claim for refund is solely in connection with determination of statutory interest or penalties
- Representing the client in judicial proceedings
2
Q
Is there a requirement for written communication for tax advice?
A
No, but it would be wise
3
Q
Should a CPA warn clients about tax return consquences
A
Yes, it is required of SSTS No.1
4
Q
Can a position lacking a reasonable basis be taken when properly discosled
A
No, it does not have a reasonable basis
5
Q
If documentation is required for a deduction and the accountant doesn’t ask for the documents can they be punished?
A
Yes
6
Q
If a tax position is “more likely than not” that it will be sustained if challenged is the accountant required to inform the client about the disadvantages?
A
No
7
Q
Disclosure of estimates is not required in most situations (T/F)
A
True
8
Q
Tax Return prepare is required to give their ID number to whom and who not
A
Must give to IRS, not required to give to client
9
Q
Would a trustee who prepares a tax return for his trust be considered a TRP?
A
No
10
Q
Reasonable basis that has a 25% chance or greater to be sustained should be disclosed (T/F)
A
True
11
Q
Ultramares always look for what?
A
Privity
12
Q
Proper delay of IRS request is only proper when…
A
the CPA believes after investigation in good faith the information is prvelaged
13
Q
If a state board of accountancy takes away a CPA license, a CPA is automatically expelled from what?
A
AICPA
14
Q
JEEP stands for what?
A
Joint Ethics Enforcement Program
15
Q
Fraud liability runs to who?
A
Reasonable Foreseeable Parties
16
Q
Negligence liability typically runs to who?
A
Limited class of parties the accountant knows will relay on the information
17
Q
Negligence provides for what types of damages
A
Compensatory
18
Q
Negligence does not provide for what type of damgages
A
Punitive
19
Q
Constructive fraud is equal to what?
A
Gross Negligence
20
Q
What is required for an accountant to be convicted under common law?
A
Make a misstatement with knowledge or recklessly make the misstatement
21
Q
What is a good defense against negligence for an auditor?
A
The audit was performed under GAAS
22
Q
Are CPA’s liable for written and oral promises?
A
Yes, both
23
Q
What can be a defense under common law liability
A
Lack of Scienter (Intent)
24
Q
Scienter can be established by what?
A
- Knowledge of material misstatement
2. Acted Recklessly
25
FCPA requires what 4 items?
1. Transactions are executed with management's instructions
2. Transactions are recorded to properly prepare financial statements and maintain accountability for assets
3. Access to assets is authorized
4. Recorded assets are compared to existing assets on a requital interval
26
What must happen before a RICO suit for Securities Fraud can be brought?
The defendant must already be convicted of Securities fraud criminally
27
The accounting portion of FCPA is only required for who?
SEC Registrants
28
To be found guilty of Racketeering under the RICO act what must have occurred?
Conducted or Participated in the Conduct
29
Who recognizes accountant-client privilege?
Congress at 15 states
30
Exceptions to accountant-client privilege under IRC
1. Criminal Matters
2. Matter before IRS or Federal Court brought by or against the U.S.
3. Tax Advice on State and Local Matters
4. Written advice of Tax Shelters
31
Securities that are exempt from under SEC
1. Bank
2. Common Carrier
3. Bankruptcy receivers
4. Insurance Policies/Annuities
32
What are the Regulation D Exemptions
1. 504 (under $1 mm)
2. 505 (under $5 mm)
3. 506 (private-placement unlimited)
33
What are the primary Securities transactions that are exempt
1. Small offerings
2. Private Placements
3. Intrastate Transactions
34
Requirement for rule 147
1. All offerees must be in state
2. 80% of issures asset and revenues must be in state
3. 80% of proceeds must be used in state
35
How is a Unilateral Contract accepted?
by action
36
How is a Bilateral Contract formed?
Each party makes a promise
37
What is a executory contract?
A valid contract where performance has yet been completed
38
What is a executed contract?
Performance has been completed
39
What does the Uniform Commercial Code govern?
Sale of Goods
40
What does common law govern?
Services and Real Property transactions
41
Are Advertisements Offers?
No, the are invitations to trade
42
If the offer is conditioned for a specific date and a letter is put in the mail that day and not received until the next has the offer been successfully accepted?
No, because the offer had to be received by that date
43
Consideration for a contract must have what characteristic?
Be legally sufficent
44
The Parole Evidence Rule excludes what?
Actions taken before a contract was formed
45
Does Accord and Satisfaction work for Unliquidated Debt or Liquidated Debt
Unliquidated Debt
46
Can a contract be formed but not enforceable?
Yes, but if not in writing under the Statute of Frauds then it's not enforceable
47
If an unilateral error in a contract was made and the other party knew about it is the party that drafted the contract liable?
No
48
Physical threats do what to a contract?
Voids
49
Fraud in the inducement of a contract does what?
Makes it Voidable
50
Methods to Discharge a contract (5)
1. Accord & Satisfaction
2. Mutual Recession
3. Release
4. Waiver
5. Novation
51
When does the Statute of Limitations start for a breach of contract?
When the contract is breached
52
A party is considered what when a party to the contract at issue owes the them money and the contract at issue was made to satisfy the debt?
Creditor Beneficiary
53
Is a UCC contract enforceable even is it is silent as to terms?
Yes
54
Faxes are part of the "Mailbox Rule" (T/F)
True
55
A contract under the UCC must have what?
Quanity
56
3 ways that a seller can accept a buyers offer under UCC
1. Shipment of Conforming Goods
2. Prompt Promise to ship goods
3. Shipment of nonconforming goods without notice of accommodation (breaches contract)
57
Is an oral modification of a contract under $500 binding?
Yes
58
Open Acceptance of a UCC contract does what to a contract
makes it unenforceable
59
Contracts under Statute of Frauds (5 types)
1. Guaranty of debt
2. Real property
3. Performance takes longer than 1 year
4. Goods priced over $500
5. Executors personal liability for debts of estate
60
Where are goods delivered to under FOB Destination Contract?
Placed stated in the contract
61
Under UCC when does the title and risk of loss shift to the buyer
When goods are delivered to a Common Carrier
62
The seller must do what before title can pass?
Identify the goods
63
Implied Warranty of Merchantability is implied by what?
Law
64
How does implied Warranty of Merchantability Arise?
Automatically upon a sale by a merchant
65
How does express warranty of merchantability arise?
Goods are sold as described
66
Implied warranty of fitness occur how?
Seller selects goods knowing the buyer's intent and the buyer relays on the seller's selection
67
3 was to create Express Warranty under UCC
1. Affirmation of Fact or Promises
2. Description of Goods
3. Sample or Model
68
3 Implied Warranties
1. Fitness
2. Merchantabiltiy
3. Usage of Trade
69
Failure of a buyer to reject goods after inspection does what?
Creates Acceptance
70
Can injured parties always collect liquidated damages?
No if they are viewed as a penalty
71
A seller can retain the lesser of what if a buyer defaults
1. $500
| 2. 20%
72
For Specific Performance or Replevin items must have what qualities?
Unique or Identified
73
A Promissory Note is made between how many parties?
2
74
A Draft is a instrument made between how many parties?
3
75
Is a note that says "Pay six months After I go to College" negotiable?
No
76
2 Categories of "Orders to Pay", Draft instruments
1. Draft
| 2. Check
77
2 Categories of "Promise to Pay" instruments
1. Notes
| 2. CDs
78
Is an instrument subject to another agreement negotiable?
No
79
Who is the drawee on a check or draft?
The Bank
80
Who is the Payee on a check or draft
Who is receiving the money
81
Who is the Drawer on a check
Person is wrote the check
82
What type of endorsement limits the warranties that the transferor of the instrument gives?
Qualified
83
What type of endorsement limits the liability of the endorser to a subsequent holder
Restrictive
84
What type of endorsement is made to a specific person
Special
85
Requirements for a Security Interest to Attach
1. A Writing (few exceptions)
2. Secured Party gives the debtor something of value
3. Debtor has "rights" to the collateral
86
What is it called when the creditor gains rights in the collateral of a loan?
Security Interest Attaches
87
Does a security interest always have to be in writing to attach?
No, if the creditor has possession of the collateral
88
Methods to Perfect security Interest
1. Filing
2. Possession
3. Automatically
4. Temporary
89
If a not is non-negotiable, can a transfer create a holder in due course?
No
90
What must a draft have in order to be negotiable?
"Pay to Order" or "Pay to Bearer"
91
What is the exception to a draft saying "Pay to Order" or "Pay to Bearer"
If it's a check, payable on demand
92
An instrument that is not a check says, "Pay to Bob". Is it negotiable?
No
93
If a check, which is demand paper, is postdated. It is payable when?
Until the date it is postdated
94
If the bank is not given notice by the drawer that a check is postdated are they liable if the pay it before the post-date?
No, the drawer must give notice
95
When the seller ships nonconforming goods is the contract voided or voidable? And by whom?
Voidable, Buyer
96
Once a seller ships nonconforming goods, what has occurred?
Breach of Contract
97
If a seller ships nonconforming goods FOB Shipping point, title and loss is with who?
Title is with the Buyer, Risk of loss is still with the Seller
98
If a buyer receives nonconforming goods and does not accept them what must they do?
Follow the Seller reasonable instructions in returning them at the seller expense
99
If a buyer cancels a contract that the cannot cancel what must the seller do?
Trying to sell the goods, and recover the difference from the buyer
100
If goods are accepted under an oral contract and those goods and that part of the contract enforceable?
Yes
101
UCC Exceptions to General Statue of Frauds (4)
1. Merchant Confirmation Memo
2. Oral contract for Special Goods substantially completed
3. Admission under Oath of an Oral Contract
4. Buyer takes possession, performance
102
What is the Shelter Provision?
Preserve HDC even if someone acquires from HDC a note with knowledge of a personal defense, but not Real Defense
103
If a HDC does not present a check within 30 days and there is a bank failure is the drawer liable?
No
104
What are real defenses?
Those that can be asserted Universally
105
How is liability of a note transferred?
Signature liability stays, bearer liability is only the last bearer
106
Do drawers of a check have primary or secondary liability?
Secondary
107
Holder in Due course takes a promissory note free of what defenses?
Personal of the maker
108
Fraud in the execution is what type of defense?
Universal/Real
109
Are Letters of Credit Transferable
Generally No
110
Are Domestic Letters of Credit revocable?
Yes
111
Are International Letter of Credit revocable?
No
112
Who must a carrier deliver goods to under a nonnegotiable bill of lading?
Consignee
113
When a document is forged is it negotiable?
No
114
When does a security interest attach if a secured party takes possession of the collateral then signs a security agreement?
At time of possession
115
What must the debtor have in order for a security interest to attach?
Rights to the Collateral
116
Is proper filing required to create a security interest?
No
117
Does a security interest where the secured party has possession of the collateral need to be in writing?
No
118
When does a Purchase Money Security Interest require filing?
If for Equipment or Inventory
119
A sale to whom typically provides a PMSI automatically?
Consumer
120
A pawnbroker lending money is an example of what?
Takes a Perfect Security Interest by Posssession
121
How can a buyer be protected from a security interest?
In the Ordinary Course of Business
122
What is the time period for a secured party to file a new PMSI when the collateral moved to a new jurisdiction?
4 months
123
If a buyer has knowledge of a security agreement and takes title of the goods in the ordinary course of business do they take it free of the security interest?
Yes
124
When must the Creditor Sell Collateral (2 ways)
1. Consumer Goods
| 2. 60% or more of the purchase price paid by the debtor
125
Upon default a secured party has what options?
1. Recover under UCC 9
| 2. Judicial Remedies
126
Requirements for the filling of a PMSI
1. List or description of collateral
2. Names of Debtor & Secured Party
3. Address of the Debtor & Secured Party
127
Endorsement "without recourse" disclaims what liability?
Contract Liability
128
How is a check different from a draft?
Payable on Demand
129
Cosurties generally have what right?
Right to Contribution
