ACCT 3350 Business Law for Accountants (D216)
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Free ACCT 3350 Business Law for Accountants (D216) Questions
A written document required by securities laws when a security is being sold. The prospectus describes the security, the financial operations of the issuing corporation, and the risk attaching to the security
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Privity of contract
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Foreclosure
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Prospectus
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Securities
Explanation
Correct Answer:
C. Prospectus
Explanation
A prospectus is a legal document that companies must provide to potential investors when issuing securities. It includes financial details, risks, and other relevant information to help investors make informed decisions.
Why other options are wrong
A. Privity of contract: This refers to the relationship between parties in a contract, not a securities disclosure document.
B. Foreclosure: This is a legal process where a lender takes possession of a property due to the borrower's failure to make payments, unrelated to securities sales.
D. Securities: This is a broad term referring to financial instruments like stocks and bonds, not a specific document required for their sale.
Prohibits excessive bail and fines, as well as cruel and unusual punishment
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Sixth Amendment
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Seventh Amendment
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Eighth Amendment
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Fourth Amendment
Explanation
Correct Answer:
C. Eighth Amendment
Explanation
The Eighth Amendment to the U.S. Constitution protects individuals from excessive bail, excessive fines, and cruel and unusual punishment, ensuring fair treatment in the justice system.
Why other options are wrong
A. Sixth Amendment: This guarantees rights related to criminal prosecutions, such as the right to a speedy trial and legal counsel.
B. Seventh Amendment: This provides the right to a jury trial in certain civil cases but does not address punishment or bail.
D. Fourth Amendment: This protects against unreasonable searches and seizures by law enforcement, not bail or punishment.
A tax return submitted by a partnership that reports the business's income and losses. The partnership itself does not pay taxes on the income, but each partner's share of the profit (whether distributed or not) is taxed as individual income to that partner
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Insurable interest
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Information return
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Shipment contract
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Consequential damages
Explanation
Correct Answer:
B. Information return
Explanation
An information return is a tax document that partnerships file with the IRS to report income, deductions, and other financial details. Since partnerships do not pay income tax at the entity level, the profits are passed through to the partners, who report them on their individual tax returns.
Why other options are wrong
A. Insurable interest: This refers to a person’s financial stake in an insured asset or person, not a tax document.
C. Shipment contract: This is a type of contract where the seller’s obligation is fulfilled once goods are shipped, unrelated to tax filings.
D. Consequential damages: These are indirect damages resulting from a breach of contract, not related to partnership taxation.
The document that must be filed with a designated state official to form a limited partnership
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articles of incorporation
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limited liability company (LLC)
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frustration of purpose
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certificate of limited partnership
Explanation
Correct Answer:
D. certificate of limited partnership
Explanation
A certificate of limited partnership is a legal document that must be filed with the state to officially create a limited partnership. It outlines essential details such as the partnership’s name, business purpose, and the roles of general and limited partners.
Why other options are wrong
A. articles of incorporation: This document is used to establish a corporation, not a limited partnership.
B. limited liability company (LLC): This refers to a separate business entity type, and its formation requires filing articles of organization, not a certificate of limited partnership.
C. frustration of purpose: This is a legal doctrine that can excuse contract performance when an unforeseen event undermines the contract’s purpose, unrelated to forming a partnership.
An agreement in which a buyer agrees to purchase and the seller agrees to sell all or up to a stated amount of what the buyer needs or requires
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Requirements contract
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Express contract
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Destination contract
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Option contract
Explanation
Correct Answer:
A. Requirements contract
Explanation
A requirements contract obligates the seller to provide and the buyer to purchase all or a specified portion of the buyer’s needed goods. This helps ensure supply stability.
Why other options are wrong
B. Express contract: This is a contract where terms are explicitly stated, but it doesn’t necessarily involve purchasing all of the buyer’s needs.
C. Destination contract: This is a shipping agreement where the seller is responsible for delivering goods to a specific destination.
D. Option contract: This gives a party the right to buy or sell something at a set price within a certain time but doesn’t require full commitment to purchasing needs.
Prohibits the denial of credit solely on the basis of race, religion, national origin, color, gender, marital status, or age. The act also prohibits credit discrimination on the basis of whether an individual receives certain forms of income, such as public-assistance benefits
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Statute of Frauds
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Equal Credit Opportunity Act (ECOA)
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Fair Credit Reporting Act (FCRA)
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Courts of law
Explanation
Correct Answer:
B. Equal Credit Opportunity Act (ECOA)
Explanation
The Equal Credit Opportunity Act (ECOA) ensures fair access to credit by prohibiting discrimination based on personal characteristics such as race, gender, and age, as well as sources of income like public assistance.
Why other options are wrong
A. Statute of Frauds: This law requires certain contracts to be in writing to be enforceable but does not address credit discrimination.
C. Fair Credit Reporting Act (FCRA): This law regulates credit reporting agencies and ensures accuracy in consumer credit reports, but it does not prohibit credit discrimination.
D. Courts of law: This refers to judicial bodies that resolve disputes and enforce laws, but it is not a specific statute protecting against credit discrimination.
A valid contract rendered unenforceable by some statute or law
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Implied contract
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Executed contract
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Void contract
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Unenforceable contract
Explanation
Correct Answer:
D. Unenforceable contract
Explanation
An unenforceable contract is one that is legally valid but cannot be enforced due to a legal restriction, such as the Statute of Frauds or expiration of the statute of limitations.
Why other options are wrong
A. Implied contract: This is a contract formed by actions rather than explicit words, but it does not refer to enforceability.
B. Executed contract: This is a contract that has been fully performed by both parties, meaning enforceability is no longer an issue.
C. Void contract: This is an agreement that was never legally valid to begin with, whereas an unenforceable contract was once valid but cannot be enforced.
A set of policies specifying the rights and responsibilities of the various participants in a corporation and spelling out the rules and procedures for making corporate decisions
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Corporate governance
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Privity of contract
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Validation notice
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Liquidated damages
Explanation
Correct Answer:
A. Corporate governance
Explanation
Corporate governance refers to the framework of rules, practices, and processes by which a corporation is directed and controlled. It establishes the roles of shareholders, management, and the board of directors in decision-making.
Why other options are wrong
B. Privity of contract: This principle states that only parties to a contract have legal rights and obligations under it, which is unrelated to corporate decision-making.
C. Validation notice: This refers to a notice given in debt collection to inform a debtor of their rights, not corporate policies.
D. Liquidated damages: This refers to a predetermined amount of compensation in a contract for breach of terms, not corporate governance.
An express contract in which a third party to a debtor-creditor relationship (the surety) promises to be primarily responsible for the debtor's obligation
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Corporation
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Winding up
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Suretyship
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Attachment
Explanation
Correct Answer:
C. Suretyship
Explanation
Suretyship is a contractual arrangement where a third party (the surety) guarantees to be primarily responsible for the debtor's obligation. This differs from a guarantor, who is secondarily liable.
Why other options are wrong
A. Corporation: A corporation is a legal entity separate from its owners and has no direct relation to a debtor-creditor obligation.
B. Winding up: This refers to the process of dissolving a business, not a contract involving a third party's financial responsibility.
D. Attachment: This is a legal process of seizing assets to satisfy a debt, not a contractual obligation of a third party.
A warranty that the law derives by implication or inference from the nature of the transaction or the relative situation or circumstances of the parties
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Joint liability
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Output contract
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Writ of execution
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Implied warranty
Explanation
Correct Answer:
D. Implied warranty
Explanation
An implied warranty is automatically applied by law based on the nature of the transaction. For example, the implied warranty of merchantability ensures that goods sold are fit for their ordinary purpose.
Why other options are wrong
A. Joint liability: This refers to shared legal responsibility among multiple parties, not a warranty.
B. Output contract: This is an agreement in which a seller agrees to sell all of its production to a buyer, unrelated to warranties.
C. Writ of execution: This is a court order to enforce a judgment, not a warranty inferred by law.
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Frequently Asked Question
This course explores key legal concepts relevant to the accounting profession, including contract law, corporate liability, financial regulations, securities law, and professional ethics. It helps accountants understand their legal responsibilities in business operations.
Accountants must comply with legal and ethical standards when handling financial records, preparing reports, and advising businesses. Understanding business law helps prevent legal violations, reduces risks, and ensures accurate financial reporting.
Key laws include: Sarbanes-Oxley Act (SOX) – Governs corporate governance and financial disclosures. Securities Exchange Act of 1934 – Regulates insider trading and securities markets. Statute of Frauds – Requires certain contracts to be in writing. Uniform Commercial Code (UCC) – Governs commercial transactions.
Expect scenario-based questions that test your ability to apply legal principles to real-world accounting situations. Topics include fraud prevention, ethical dilemmas, financial reporting compliance, and corporate governance.
Review key legal concepts from course materials. Practice scenario-based questions to strengthen application skills. Understand case laws like Salomon v. Salomon and Carlill v. Carbolic Smoke Ball Co. Stay updated on financial regulations and accounting ethics.
You can access tailored exam practice questions on ULOSCA.com, which provides expertly crafted scenarios, explanations, and answers to help you prepare effectively.