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Legal Concepts for Accountants > Final Exam > Flashcards

Final Exam Flashcards

1
Q

What is the difference between an independent contractor and an employee

A

an employee the employer has all control over them. like how many hours they work and the tools they use

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2
Q

What are the four ways to form an agency

A

express
ratification
estopel
by law

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3
Q

What is an agency by ratification

A

principle didn’t tell you that you were an agent and after the fact the principle approves the acts of the agent

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4
Q

What is an agency by estopel

A

caused a 3rd person to believe that someone was your agent

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5
Q

What is an agency by operation of law

A

example would be a husband and wife

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6
Q

What are the Agent;s duty to the principle

A

Performance
Notification - tell any information you learn to the principle
Loyalty - solely loyal to the principle and maintain confidentiality
Obedience - follow all lawful instructions
Accounting - any money in and out - and no commingling of funds

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7
Q

What are the Principle’s Duties to the Agent

A

Compensation
Reimpursement
Indemnification - agent acting on your behalf incurs liability you have to pay them
Cooperation - given particular job to to
Safe working conditions

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8
Q

What are the Agent’s Rights

A

normal contract remedies
demand in accounting - in commissions
no specific performance

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9
Q

What are the principle’s Right s

A

Constructive trust - not all money agent collects turned in

Avoidane - agent breach contract you can rip it up

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10
Q

What is express athority

A

written/oral detailed instructions

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11
Q

agent has power to bind you to a contract that authority must be in writing

A

equal dignaty rule

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12
Q

principle is knowm and agent is not liable

A

disclosed principle

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13
Q

agentknow that the agent is representing someone else agent is liable

A

partialy disclosed

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14
Q

no reason to know of principle/agent relationship agent is liable

A

undisclosed

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15
Q

What are the ways to terminate an agency by Act of the Parties

A 
Lapse of Time 
Purpose Achieved 
Occurenc of a specific event 
mutual agreement 
at the option of one party
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16
Q

What are the ways to terminate the agency by operation of law

A

death or insanity
Impossibility - destruction of the subject matter
Changed circumstances
Bankruptcy
War between the principles contry and agent’s country

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17
Q

What are the advantages to a sole proprietor shi p

A

flexibility and earnings are only taxed once

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18
Q

what are the disadvantages to a sole proprietor ship

A

personally liable for debt of the business and difficult to raise capitol

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19
Q

type of franchise wher manufacturer licenses a dealer to sell its product

A

distributorship

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20
Q

type of franchise where franchise operatites under a trade name and is identified as amember fo a slelect grop of dealers that engage in the franchisor’s business

A

chain style

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21
Q

type of franchise where manufacturing or processing plant aragnement the franchisor transmits to the franchisee the essential ingredients or formula to make a particular produc t

A

manufacturing arangement

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22
Q

franchisor has total control of franchisee

A

franchise rule

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23
Q

how do you terminate a franchise

A

governed by contract law

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24
Q

what is a pass through entity

A

profits pass through to owners

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25
Q

What happens if partnership is not expressed inwrithing

A

equal mgmt rights
and equal profit rights
any partner can bind in a contract

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26
Q

what does joint and severally liable

A

partners are liable for the entire debt but you could be responsible for the entire amount if other partners can’t pay

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27
Q

professionals are only liable for there negiligence and not the negligence of their partners

A

LLP

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28
Q

partners’s liablity is limited to the amount they have invested into the compny

A

LP

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29
Q

Why are LLC’s popular

A

governed by state statute
owners are called members
protection of a corporation
taxed as corporation or partnership

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30
Q

one transaction or short brief group of transactions taxed like a partnership have a duty of loayalty and can be held personally liable

A

Joint Venture

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31
Q

inv. group put together to finance a project

A

syndicate

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32
Q

buying group to get discounts (common among farmers)

A

coorporatives

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33
Q

going to need a good business plan and financials to prove seriousness and propably have to personally guarentee it

A

loan

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34
Q

3rd party provides capital to you and they are going to want ownersip and mgmt rights

A

ventrue capital

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35
Q

pooling funds on the internet

A

crowdfunding

36
Q

artificial legal persons with many of the same rights as citizens

A

corporations

37
Q

if the conduct is with in the scope of employment for a corporation then the corporation is responsible for thier acts

A

apparent authorigty

38
Q

Corporations are liable for ___and ___ acts

A

tort and crimminal

39
Q

in state of inforporation

A

domestic corporation

40
Q

in another state

A

foreign orp

41
Q

in another contry

A

alian corp

42
Q

corporation with few owners

A

closely held corporoation

43
Q

people wo established corporation have done all the nessessary things with minor error like a misspelled name

A

dejur corporation

44
Q

major defect in establishing a corporation whether the corporation or not depends on the state normally it’s a yes

A

defacto corporation

45
Q

contracts made for unauthorized purposes

A

ulta vires doctrine

46
Q

how do you peirce the vcorporate veil

A

you must have a comingling of funds and follow states tattuete and have some intent

47
Q

a corporate directo or officer will not be liable to the corooration or to tits share holders for honest mistakes of judgement and bad business decisons

A

business judgement rule

48
Q

describe the 1933 act

A

inatial sale os stock
must dsiclose all material informaiton
registration statement with SEC

49
Q

how is the 1933 act violated

A

cant’ omit materila fact
know of the material fact
defendant must excercise due diligenccec

50
Q

describe the 1934 act

A 
disclosures are continual 
10b 10b-5 
material misreprenstation - fraud 
insider trading 
missappripriation theroy 
short swing profits
51
Q

when someone with int the corporation has information not avialiable to the public and acts on it

A

insider trading

52
Q

lawyer learns insider information

A

missappropriation theroy

53
Q

insider had transactions of stock with in six months assumbed to be insider trading

A

short swing profit

54
Q

outside directors, and chief officers must sign financial documents

A

SOX

55
Q

promotes competition and don’t want thins that restrict trade

A

sherman anti trust act

56
Q

agreements rival firm agreemenst

apply the rule of reaso and perse violation

A

Section 1 of anti trust act

57
Q

2 rivals have agreement to do someting

A

horizontal restriant

58
Q

firms in manufactouring buy up their suppliers

A

vertical restraint

59
Q

rquired to pay same price

A

resale price maintence agreements

60
Q

actions take by firms to get a monopoly

A

section 2 of the anti trust act

61
Q

price pruduct at or below cost to drive compeitor out of business

A

predatory priceing

62
Q

firm purchsing and incricing price of thins to buy and driving out competition

A

predatory bidding

63
Q

professionals can be held liable under what for negligence and breaking their duty of care

A

contract law

64
Q

attorney client relationsip

A

all communications are confidential and can’t be shared with others uless said

65
Q

attornes are liable for client and –

A

INTENDED 3RD PARTY BENEFICIEARYS

66
Q

accountants client relationship

A

must turn over documents if told by court

67
Q

conveying land to someone for their life and where it goes after death obligation to maintain

A

life esttate

68
Q

ownership after death goes to other commone owners not heirs

A

joint tenancy

69
Q

ownership after death goes to hears

A

tennancy in common

70
Q

starts on one date and ends on another date

A

fixed term leace

71
Q

leas pmts determine life of lease

A

periodic tenancy

72
Q

eithe party can terminate with out notice

A

tenancy at will

73
Q

right to go onto land limited use of someone elses property

A

easements

74
Q

when you sell real estate

A

there is an implied warrenty of habitablity

seller must disclose hidden defects

75
Q

best protection of the title

A

warrenty deed

76
Q

used to clear the title

A

quit claim deed

77
Q

obtain posession with out getting a dead

A

adverse possession

78
Q

areas of land dedicated to how land could be developed

A

zoning laws

79
Q

have some reason to insure something

A

insurable intrest

80
Q

insureance for high level executives incase someone dies

A

key man insurance

81
Q

pafter a police had been forceed for a specified length of time the insurer coannoft contest stmts made in application

A

incontestablity clause

82
Q

life insurance po.ice will not automatically lapes if no pmt is make on the date due ordinarly under such provison the unsure d has a grace period of thirty or thirty one days with in which to pay an over due primimum befor the police is canceled

A

antilapse clause

83
Q

to prevent mis understandings

A

ambigouity rule

84
Q

creditors rights to live insurance

A

moste states exclude from creditors

85
Q

pay money and beneficiary is paid when you die

A

whole life

86
Q

limited pmt

A

you only pay for a limited amount of time

87
Q

make payments for period then coverage ends

A

term insurance

Legal Concepts for Accountants (5 decks)

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