ACCT 3350 Business Law for Accountants (D216)
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Free ACCT 3350 Business Law for Accountants (D216) Questions
A situation in which the personal property of one person (a bailor) is entrusted to another (a bailee), who is obligated to return the bailed property to the bailor or dispose of it as directed
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Assignment
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Corporation
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Dissolution
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Bailment
Explanation
Correct Answer:
D. Bailment
Explanation
A bailment occurs when the owner of personal property (the bailor) temporarily transfers possession of the property to another party (the bailee) under an agreement that the property will be returned or otherwise handled as instructed.
Why other options are wrong
A. Assignment: The transfer of contractual rights to another party, not the transfer of possession of property.
B. Corporation: A legal entity, unrelated to the transfer of personal property.
C. Dissolution: The termination of a legal entity, such as a partnership or corporation, not the temporary transfer of property.
Information or a process that gives a business an advantage over competitors who do not know the information or process
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Patent
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Trade secret
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Trademark
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Copyright
Explanation
Correct Answer:
B. Trade secret
Explanation
A trade secret is confidential business information (such as formulas, processes, or strategies) that gives a company a competitive advantage. Unlike patents, trade secrets are protected as long as they remain undisclosed.
Why other options are wrong
A. Patent: A patent grants exclusive rights to an invention for a limited period but requires public disclosure, unlike a trade secret.
C. Trademark: A trademark protects brand identifiers such as logos, names, or symbols but does not cover confidential business processes.
D. Copyright: Copyright protects original works of authorship, such as books, music, and software, but not secret business information.
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.
A third person who receives a benefit from a contract even though that person's benefit is not the reason the contract was made
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Plaintiff
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Independent contractor
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Police powers
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Incidental beneficiary
Explanation
Correct Answer:
D. Incidental beneficiary
Explanation
An incidental beneficiary is someone who benefits from a contract between two other parties but has no legal rights to enforce the contract because the benefit was unintended.
Why other options are wrong
A. Plaintiff: A plaintiff is someone who files a lawsuit, not necessarily a third party benefiting from a contract.
B. Independent contractor: This is a person or entity contracted to perform work but is not related to third-party contract benefits.
C. Police powers: This refers to the government’s authority to regulate behavior and enforce laws, not contract beneficiaries.
A distribution of corporate profits to the corporation's shareholders in proportion to the number of shares held.
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Fungible goods
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Forbearance
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Stock warrants
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Dividends
Explanation
Correct Answer:
D. Dividends
Explanation
Dividends are payments made by a corporation to its shareholders, typically as a portion of the company’s profits. These distributions are usually paid in cash or additional shares and are proportional to the number of shares each shareholder owns.
Why other options are wrong
A. Fungible goods: These are goods that are interchangeable with others of the same type, such as grains or oil, and have no relation to corporate profit distribution.
B. Forbearance: This refers to a creditor’s agreement to temporarily delay debt collection, unrelated to corporate profit sharing.
C. Stock warrants: These give the holder the right to purchase stock at a fixed price in the future but do not represent profit distribution to shareholders.
Generally, stocks, bonds, or other items that represent an ownership interest in a corporation or a promise of repayment of debt by a corporation
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Preferred stock
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Securities
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Foreclosure
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Symbolic speech
Explanation
Correct Answer:
B. Securities
Explanation
Securities refer to financial instruments like stocks and bonds that represent ownership in a company or a creditor relationship with it.
Why other options are wrong
A. Preferred stock: A type of security but not a general term for all investment instruments.
C. Foreclosure: A legal process where a lender takes control of a property due to loan default, unrelated to securities.
D. Symbolic speech: A First Amendment concept protecting nonverbal expression, unrelated to financial instruments.
A court-created doctrine under which a party to a contract will be relieved of his or her duty to perform when the objective purpose for performance no longer exists (due to reasons beyond that party's control)
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Limited partnership (LP)
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Courts of equity
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Frustration of purpose
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Anticipatory repudiation
Explanation
Correct Answer:
C. Frustration of purpose
Explanation
Frustration of purpose occurs when unforeseen events make fulfilling the contract's purpose impossible, releasing both parties from their obligations. This doctrine ensures fairness when circumstances change drastically beyond anyone's control.
Why other options are wrong
A. Limited partnership (LP): This is a type of business structure involving general and limited partners, unrelated to contract law doctrines.
B. Courts of equity: These are courts that provide remedies other than monetary damages, but they do not define the doctrine of frustration of purpose.
D. Anticipatory repudiation: This occurs when a party declares they will not fulfill their contractual duties before the performance is due, which is different from frustration of purpose.
Something given or some act done in the past, which cannot ordinarily be consideration for a later bargain
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Statute of frauds
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Forbearance
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Past consideration
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Promissory estoppel
Explanation
Correct Answer:
C. Past consideration
Explanation
Past consideration refers to an act or benefit that was given before a promise was made. Since consideration must be given in exchange for a current promise, past actions generally cannot serve as valid consideration for a new contract.
Why other options are wrong
A. Statute of frauds: This requires certain contracts to be in writing to be enforceable, but it does not relate to past actions being used as consideration.
B. Forbearance: This is the act of refraining from enforcing a legal right, which can sometimes serve as consideration in a contract.
D. Promissory estoppel: This is a legal principle that enforces a promise even without consideration if the promisee relied on it to their detriment.
Protects consumers against inaccurate credit reporting and requires that lenders and other creditors report correct, relevant, and up-to-date information
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Covenant not to compete
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Fair Credit Reporting Act (FCRA)
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Multiple product order
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Order for relief
Explanation
Correct Answer:
B. Fair Credit Reporting Act (FCRA)
Explanation
The Fair Credit Reporting Act (FCRA) is a federal law designed to ensure the accuracy, fairness, and privacy of consumer credit information. It regulates credit bureaus and requires that creditors report correct and relevant financial data about consumers.
Why other options are wrong
A. Covenant not to compete: This is a contractual agreement that restricts one party from engaging in competing business activities, unrelated to credit reporting.
C. Multiple product order: This is a regulatory action by the Federal Trade Commission (FTC) that applies to false advertising cases, not credit reporting.
D. Order for relief: This is a court-issued order in bankruptcy proceedings, unrelated to credit reporting accuracy.
A monetary award sought as a remedy for a breach of contract or a tortious act
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Damages
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Petitioner
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Reformation
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Rescission
Explanation
Correct Answer:
A. Damages
Explanation
Damages refer to monetary compensation awarded to a party that has suffered loss or harm due to a breach of contract or tortious act. The purpose is to restore the injured party to the position they would have been in had the breach or wrongdoing not occurred.
Why other options are wrong
B. Petitioner: This is a person who brings a case before a court, usually in an appellate or special proceeding, not a monetary remedy.
C. Reformation: This is a legal remedy that modifies the terms of a contract to reflect the true intent of the parties, rather than awarding money.
D. Rescission: This is the cancellation of a contract to return both parties to their original positions, rather than providing monetary compensation.
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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.