Business Law for Accountants Review Questions Flashcards
The US Constitution sets forth the governments ________?
limits and powers
Laws enacted by legislative bodies at any level of government make up the body of law generally referred to as _____?
statutory Law
The Uniform Commercial Code provides a set of rules governing ________?
commercial Transactions
Administrative law includes _______?
the rules, orders, and decisions of a government agency
The classification of law that concerns the rights and duties that exist between persons and between citizens of their governments is _______?
civil Law
Criminal statutes prescribe which of the following?
Wrongs committed against society for which society demands redress
In a civil case, the object is to _______?
obtain a remedy to compensate the injured party
In a criminal case, the object is to _______?
punish a wrongdoer to deter others from similar actions
A precedent is _______?
a court decision that furnishes an example for deciding subsequent cases involving similar or identical facts or principles
Each court has a jurisdiction. Jurisdictions are best defined as ______?
th geographic area in which a court has the power to apply the law
When Laura and Mick can’t resolve their dispute amicably, Laura initiates a lawsuit against Mick. Laura is ________ in the lawsuit?
the plaintiff
In a case, the court may rule contrary to the precedent if the court decides that the precedent is _________?
incorrect or inappropriate for the situation
The federal government has the power to regulate commercial activities among the states under ________?
the commerce clause
Nat Gas Co. obtains a federal license to operate a gas pipeline through a certain area of Oregon. The Oregon state legislature enacted a law that bans gas pipelines in that area. Most likely, the state will violate ___________?
the supremacy clause
To reduce traffic, Market Town enacted an ordinance that allows only a few specific street vendors to operate in certain areas. A court would likely review this ordinance under the principle of __________?
equal protection
Company managers are most likely to find that unethical behavior in the workplace can be deterred by ______?
taking immediate action in response to unethical conduct
Duty-based ethical standards are most likely to derive from ______?
philosophical reasoning
Making a decision based on its projected financial outcome and then arguing that the decision is ethical is _______?
rationalizing the decision
Jimena, a marketing manager for Home Stuff LLC, is responsible for branding the company’s products. Aspects of branding that can be trademarked include _________?
a catchy phrase, such as “stuff your home with Home Stuff”
Without permission, Race Runners Inc. uses a trademark that is similar to the registered mark of Swiftfoot Inc. This use of the mark constitutes the trademark dilution if ________?
the use diminishes the distinctive quality of the work
Brewed Beans Inc. makes and sells “Co Co Cafe”, a chocolate-flavored coffee. Darkroast Inc. later marketed a similar drink under the name “Ko Ko Cafe”. This is most likely _______?
trademark infringement
Phoenix Inc. is a publisher. Phoenix uses a logo featuring a bird rising from a flame to identify its publications. The publications are printed ina unique process that includes a 3-D printer. Phoenix could most likely obtain trademark protection for its _______?
logo
Serena invents a new, unique long-life battery. A grant from the government that gives Serena the exclusive right to make and sell the battery for a certain period of time is _________?
a patent
How long does a company have to file a challenge for an infringed patent?
6 years
To be protected under the Copyright Act, a work must me _________?
original and fixed in a durable medium
Prognosis Inc. owns a brain-computer interface that enables physicians to diagnose and treat some diseases quickly and accurately. Federal copyright protection extends to _________?
the parts of the app that can be read by computers
Like most successful companies, Phones Inc. has trade secrets. The law protects those secrets if the information is _______?
unique and has value to a competitor
The marketing process for “Price and Profit”, an app that businesses can use to track their revenue, profit, and payroll, is protected by _______?
trade secret laws
The primary source for contract law is ______?
common law
Juan offers to pay Sari to deliver certain documents within 30 minutes. Sari can accept the offer only by completing the task within the deadline. If she does, Juan and Sari will have _________?
a unilateral contract
Marketing Inc. offers to create a campaign to increase N’Ice Cream Inc.’s online business. N’Ice agrees to pay for the service. These parties have _______?
an express contract
Macy offers to sell his fitness watch for $70 to Nona. Nona promises to pay Macy the price later. They exchanged the watch for the funds. A contract was formed when ______?
Nona promised to pay Macy for the watch
Grinders Mill agrees to sell to Harvest Company a certain quantity of refined grains. Some of the other terms int he deal are left open. In the case of a dispute, a court will generally presume ________?
whatever is reasonable
Bon, an agent for City Motors Inc., e-mails Dale on May 1st that the dealer will sell to him a 2018 Ford pick-up truck for $25,000 between May 1st and July 1st. Bon’s offer to Dale is _______?
irrevocable for the stated period
Bean Processor Inc. agrees to ship a certain quantity of coffee beans to Coffee Cafe LLC. Bean sends Coffee an
e-mail indicating that the parties intended to form a contract. Against Bean, as a contract, the email will be sufficient if __________?
it is signed by Bean
Donna offers to sell her used sofa chair, coffee table, end table, and lamp to Etta for $700. Etta responds that she will pay that price if Donna’s TV set is included. Neither party is a merchant. Their contract is formed according to _________?
the terms of the original offer
Seacoast Transport Co. pays Trucks and Trailers Inc. a stated price for the use of seven tractor-trailer rigs for a year. Under the UCC, this is __________?
a lease
Mining Co. purchases the business assets of Open Pit Inc., including its equipment and supplies for an agreed-to-price, payable in installments under the UCC, this is ________?
a sale
Embers Co. orders 12 fire extinguishers from Firefighting Inc. which delivers the equipment. This is _______?
a sale of goods
Jo owns a condominum that she leases to Kia. Jo employs Maria to manage the condo. Jo gives her daughter $450 on her 16th birthday. Jo sells her car to her neighbor Steve for $1,500. Article 2 of the UCC covers ________?
the sale to Steve
Don enters into a contract to buy Ezra’a office building for a certain price subject to an appraiser’s evaluation of the structure’s condition. IF the appraiser deems the condition to be substandard (no up to par), the party’s obligations will be _______?
discharged, because the buildings structure was not up to par
Megan contracts to sell Nonny her horse for $4,000. This contract will be fully discharged when ______?
they exchange the horse for the money
Jamal and Keri enter into a contract for Jamal to renovate Keri’s house by a certain date. Jamal never performs. After the applicable limitations period has passed, Keri decides to bring a suit against Jamal for breach of contract. This suit __________?
can no longer be brought because the applicable limitation has passed
Trucking LLC enters into a contract to deliver a certain quantity of potatoes to United Foods’ refrigerated warehouse in exchange for a specified payment. Trucking LLC delivers the potatoes to the location. United’s duty to pay is __________?
absolute
Nature’s Eggs Inc. agrees to supply Omelet Express with 500 eggs. Nature’s Eggs can reasonably ask Omelet Express to pick up the eggs at _______?
any reasonable hour
ABC Hardware store orders 100 power hand-drills from Drilling Tools Inc. When the hand drills are delivered, they are missing pieces. ABC rejects the shipment. To exercise a right to cure, Drilling must __________?
promptly notify ABC of the intent to cure
Chair Company contracts to deliver a dozen suites of dining room tables and chairs to Furniture Store on May 1st. On April 15th, Chair tells Furniture that delivery will be delayed until June 1st. Furniture may ________?
await performance, sue chair, or suspend its own performance
Elegant Carpet Inc. agrees to sell a certain amount of carpeting to Fabulous Floor under a shipment contract. Elegant must _______?
place the goods in the hands of the carrier
Holiday Co. sells Idyll brand campers and trailers. Under most circumstances, Holiday will be presumed to have warranted that its title to the goods is ________?
good and valid
Jess, a salesperson for Hikers Inc. shows Lane, a buyer for Metro Diner, display items in kitchen showroom, stating that any purchased equipment will match the display. This is _________?
an express warranty
Bike Shop sells a trail bike to CIena. When Ciena rides the bike, the frame breaks apart. The cause is something that Bike Shop did not know about and could not have discovered. This is a breach of _______?
the implied warranty of merchantability
Sofia purchases a new vehicle from a neighborhood car dealer. The vehicle specifically states that there is a bumper-to-bumper warranty for the first 30,000 miles and an engine and drive train warranty for 100,000 miles. The warranty documentation supplied with the car specifies that wear and tear items, such as brake pads, belts, wipers, bulbs, and oil changes are excluded. After 25,000 miles, Sofia’s car needs new brake pads. She is told that this is not covered by the warranty. This exclusion is an example of a ________?
warranty disclaimer
Beryl enters into a contract with Clay for a guided tour of Deep Canyon. Clay represents that he is an experienced, knowledgeable guide when in reality he has never been in the canyon. Most likely, Beryl ________?
can rescind the deal based on fraudulent misrepresentation
Restaurant Food Inc. intends to sell a certain quantity of beef for $1,100. In an email, however, the firm’s sales representative mistakenly offered to sell the beef to Steak House for $1,000. Steak’s manager immediately accepts. The seller is _________?
bound to the deal at the offered price
At an auction, Ben bids on a 1957 Chevy Coupe, believing that it is worth more than they price asked. When the car proves to need more repairs than Ben estimated, and that it is worth less as is. Ben is ______?
still liable on the bid
Open Range agrees to sell Pinewood Ranch a remote parcel of land for $15,000. Both parties believe the land to be worthless, but beneath it is shale rock containing oil. A court would ________?
not rescind the contract
Bee is an employee of Credit Agency Inc. One the termination of Bee’s position, Credit pays Bee $10,000 to agree not to disclose the employer’s confidential information. Later, Bee sells the information to Debt Records LLC for $100,000. In a suit for breach, credit is most likely to recover ________?
only the $10,000 from Bee
Lee contracts to work for Media Co. during May for $4,500. On April 30th, Media cancels the contract. Lee then accepts a similar job with New Ads Inc. which pays $3,500. Lee files a suit against Media. As compensatory damages, Lee can recover _________?
$1,000
Emma enters into a contract to buy a tract of riverfront property from Forrest Acres to build and sell a residential development. Forrest Acres fails to close the sale. Emma’s remedy is most likely _______?
specific performance
Review Inc. contracts to resurface the pools at Swim Park by June 1st. Review knows that if performance is not timely, Swim Park will have to delay its seasonal opening. Review finishes the job on June 15th. In a suit for a breach, Swim Park can recover ________?
the loss of profit from the delayed opening
Steel Buildings Inc. agrees to sell 4 portable garages to Truck Service Center. 5 days later, Truck refuses delivery and cancels the contract. Steel is entitled to _________?
resell the garages and recover any damages from Truck
Builder Inc. and Concrete Supply Company enter into a contract for the sale of cement. Concrete delivers, but builder does not pay. Concrete can recover as damages __________?
the market price at the place at which concrete delivered the goods plus incidental damages
Keisha contracts to buy appliances from Crazy Carlos Appliances. Keisha agrees to pay half within 5 days of the order and the remainder upon delivery. Keisha fails to pay the first half. Carlos can _________?
withhold delivery
Fiesta LLC Contracts to buy 1,000 balloons from Gas Bags Inc. for $1 per item. When the market price decreases to 50 cents per balloon, Fiesta refuses to go through with the deal. Gas Bags can recover ________?
$500, the difference between the contract price and the market price
Real Stones Ince and Sparkling Jewelry Stores enters into a contract for the sale of gemstones. The seller fails to deliver. Sparkling can recover as damages the difference between ____________?
the contract price and the market price
Office Express orders 100 smartphones from Electronic Supply for $500 each. Electronic Supply sends 100 flip phones instead. Office Express has the right to _________?
reject the shipment
Art and Antiques LLC orders 5 pieces of rare imperial jade from Art Brokers Inc. When the shipment does not arrive in the expected time, Art and Antiques contacts Art Brokers who responds they have decided not to sell and offers to return the payment. Art and Antiques can ___________?
obtain specific performance
ABC Hardware orders a shipment of hammers and saws from Tools R Us for a special DIY event that they are planning. ABC agrees to pay for the tools on delivery. Tools R Us accepts the order but fails to deliver. ABC Hardware then purchases the hammers and saws from Enzo’s Tools, but the tools do not arrive in time for the event. ABC can _________?
recover consequential damages
Brew Pub’s debt to Credit Services is past due. Credit obtains a judgment against Brew, but the firm refuses to pay. Credit asks the court to order the seizure of Brew’s property. This is a request for __________?
a writ of execution
Equipment Co. holds a lien on Fertile Farms equipment. The equipment can be sold to satisfy the debt _________?
if before the sale, notice is given to Fertile Farms
Auto Sales and Finance wants to get paid for its goods and services, so it will not sell goods or lend funds unless payment is guaranteed. To obtain these goods or services, a customer or borrower might pledge _________?
collateral
Joe files his income tax return showing a refund due of $5,000. The IRS audits his return and finds several unjustified deductions, a missing W-2, and several arithmetical errors. As a result, Joe has no refund coming but instead owes $3,500. When Joe fails to pay, the IRS issues a __________?
writ of garnishment to Joe’s employer to take a portion of his wages each week
Bach borrows funds from City Bank to pay his tuition. Dvorak cosigns the credit application. After the loan agreement is signed, Bach agrees to a higher rate of interest without telling Dvorak, who is thereby _______?
discharged from the agreement
Ran is a surety for Su’s loan from Tempo Credit. When Su pays the debt owed to the lender, Ran’s right of subrogation entitles the surety to ______?
any right that the creditor had against the debtor
Petro Refinery asks Quality Bank for a loan to increase its inventory. Quality requires Roma, Petro’s president, to sign a personal guaranty to pay the debt if Petro defaults. The guaranty is required to be in writing because _______?
the main purpose rule does not apply
Brie, Cam, and Franco are cosureties of Samson’s debt to Finance LLC. Brie pays the entire debt. her right of contribution entitles her to recover any amount paid above the surety’s obligation from _________?
Cam and Franco
A voluntary petition in bankruptcy must include ________?
a list of the debtor’s creditors and the amount of the debt owed to each
Because the homestead exemption interacts with other areas of the law that relate to creditors’ rights and remedies, it can sometimes operate to cancel out _________?
a portion of a lien on a debtor’s real property
If a voluntary petition in bankruptcy is found to be proper, the courts entry for an order for relief puts into place __________?
an automatic stay
In addition to financial statements, each voluntary petition in bankruptcy must include _________?
a certificate proving the receipt of credit counseling
Under Ch 11, soon after the entry of the order for relief ________?
a creditors committee of unsecured creditors is appointed
Compared to Ch 7 and 11, a Ch 13 plan _________?
allows a debtor to retain possession of his or her assets
Under Ch 7, the primary effect of a discharge is to ________?
void a judgment on a discharged debt and prohibit an action to collect it
Under Ch 7, creditors are paid in a certain order of priority. The highest priority class compromises claims for _______?
domestic support
Under and chapter of the Bankruptcy Code, failing to file the necessary documents with the debtor’s petition for relief can result in _________?
the dismissal of the petition
Gina’s creditors attempt to force her into bankruptcy proceedings. The creditors will be unsuccessful if Gina is __________?
a farmer
The chapter of bankruptcy in which the debts are discharged and the debtor is given the opportunity of a fresh start is _______?
Ch 7, Liquidation
Retail Stores Inc. wants to agree with its creditors on a plan under which it pays a portion of its debts and is discharged from the rest. To accomplish this goal, the corporation should file a petition in bankruptcy under Ch 11 for relief through ___________?
a reorganization plan
Without creating a separate business organization, Rey started up Street Cruisers, a pre-owned auto sales enterprise. This enterprise is __________?
a sole proprietorship
Bayard organized, and owns and operates, Cypress Tours in the simplest form of business organization. This is a _______?
sole proprietorship
Ahmed starts up and assumes the financial risk of, Data Worlds, a new marketing enterprise. As a sole proprietorship, the enterprise must meet legal requirements relating to ________?
taxes
Garcia, the owner of Data Master, a sole proprietorship, wants to obtain additional business capital. This opportunity is most likely limited to __________?
borrowing funds
Ling owns and operates Metro Delivery Service as a sole proprietorship when she dies, the business will automatically _______?
dissolve
Maeve sells New Energy, a sole proprietorship that makes and sells solar panels, to Olaf. This is _________?
a transfer of ownership of the business
Van started Wind Systems to make and sell turbines. Later, Van contracts Xi to invest additional capital in the firm in exchange for 25% of the profits. Van and Xi are not partners in Wind Systems because __________?
they do not have joint control over the business
Obie operates Pizza Palace. Obie hires Qua to take and fill customers’ orders at an hourly rate of $15.00, plus tips. Obie and Qua are not ____________?
partners because Qua does not have an ownership interest or management rights to Pizza Palace
Deb and Eve are partners in Foundations, a construction outfit. Deb manages the business. For the service, unless the partnership agreement states otherwise, she is entitled to pay in proportion to her _________?
capital contribution
