ACCT 3350 Business Law for Accountants (D216)
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Free ACCT 3350 Business Law for Accountants (D216) Questions
Authorization to act as another's agent either in specified circumstances (special) or in all situations (general)
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Output contract
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Right of subrogation
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Power of attorney
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Publicly held corporation
Explanation
Correct Answer:
C. Power of attorney
Explanation
A power of attorney is a legal document that grants one person (the agent) the authority to act on behalf of another (the principal) in specific or general matters. It is commonly used in financial, legal, or medical decisions.
Why other options are wrong
A. Output contract: This is an agreement where a seller agrees to sell all its production to a single buyer, unrelated to legal authorization.
B. Right of subrogation: This allows one party to step into another’s legal position to recover damages but does not grant agency authority.
D. Publicly held corporation: This refers to a company with publicly traded shares, unrelated to an agent’s authorization to act for another.
In contract law, the withdrawal of an offer by an offeror. Unless an offer is irrevocable, it can be revoked at any time prior to acceptance without liability
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acceptance
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consideration
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rescission
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revocation
Explanation
Correct Answer:
D. revocation
Explanation
Revocation is the act of withdrawing an offer before it is accepted. Unless an offer is made irrevocable (such as through an option contract), the offeror has the right to revoke it at any time before acceptance without facing liability.
Why other options are wrong
A. acceptance: This refers to the offeree's agreement to the terms of the offer, not the withdrawal of the offer.
B. consideration: This is something of value exchanged in a contract, not related to withdrawing an offer.
C. rescission: This refers to the cancellation of a contract after it has been formed, whereas revocation occurs before a contract is accepted.
A court's order, prior to a trial to collect a debt, directing the sheriff or other officer to seize nonexempt property of the debtor. If the creditor prevails at trial, the seized property can be sold to satisfy the judgment
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Tender of delivery
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Implied warranty
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Writ of attachment
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Homestead exemption
Explanation
Correct Answer:
C. Writ of attachment
Explanation
A writ of attachment is a court order that allows a creditor to seize a debtor’s property before a trial to prevent the debtor from disposing of assets. If the creditor wins the case, the property may be sold to satisfy the judgment.
Why other options are wrong
A. Tender of delivery: This refers to the seller’s obligation to deliver goods to the buyer under a contract, unrelated to debt collection.
B. Implied warranty: This is a legal guarantee that goods sold meet basic quality and performance standards, not a court order for seizing property.
D. Homestead exemption: This protects a portion of a homeowner’s property from forced sale to satisfy certain debts, rather than enabling seizure of assets.
In the context of partnerships, an express agreement made at the time of partnership formation for one or more of the partners to buy out the other or others should the situation warrant
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Operating agreement
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Buy-sell agreement
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Liquidation
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Shareholder agreement
Explanation
Correct Answer:
B. Buy-sell agreement
Explanation
A buy-sell agreement outlines how a partner’s interest in a business will be transferred in case of retirement, death, or departure.
Why other options are wrong
A. Operating agreement: Used for LLCs, not specifically for partnerships.
C. Liquidation: The process of closing and distributing assets, not an agreement to buy out a partner.
D. Shareholder agreement: Governs relationships among shareholders in a corporation, not partnerships.
A legal process used by a creditor to collect a debt by seizing property of the debtor (such as wages) that is being held by a third party (such as the debtor's employer)
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Symbolic speech
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Garnishment
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Nominal damages
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Police powers
Explanation
Correct Answer:
B. Garnishment
Explanation
Garnishment is a legal process where a creditor collects a debt by seizing a debtor’s wages or assets held by a third party, such as an employer or bank.
Why other options are wrong
A. Symbolic speech: Refers to nonverbal communication, such as protests or demonstrations, and is unrelated to debt collection.
C. Nominal damages: A small monetary award granted when a legal wrong has occurred, but no significant financial loss has been proven.
D. Police powers: The authority of states to regulate health, safety, and welfare, not a method for debt collection.
A formal contract between a debtor and his or her creditors in which the parties agree to negotiate a payment plan for the amount due on the loan instead of proceeding to foreclosure
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Fair Credit Reporting Act (FCRA)
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Workout agreement
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Remedies at law
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Financial Services Modernization Act (Gramm-Leach-Bliley Act) (1999)
Explanation
Correct Answer:
B. Workout agreement
Explanation
A workout agreement is a contract between a borrower and a lender to restructure a debt and create a repayment plan to avoid foreclosure. This agreement typically includes modified loan terms and payment schedules.
Why other options are wrong
A. Fair Credit Reporting Act (FCRA): This law regulates credit reporting and protects consumers from inaccurate credit information, but it does not deal with foreclosure prevention.
C. Remedies at law: This refers to monetary compensation for legal disputes, not debt restructuring agreements.
D. Financial Services Modernization Act (Gramm-Leach-Bliley Act) (1999): This law deregulated financial services and expanded the range of services banks could offer, but it is not related to workout agreements.
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.
The branch of law that defines and punishes wrongful actions committed against the public
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Constitutional law
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Common law
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Criminal law
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Procedural law
Explanation
Correct Answer:
C. Criminal law
Explanation
Criminal law deals with offenses against the public, government, or society as a whole. It establishes punishments for crimes such as theft, assault, and fraud, and is enforced by the government through prosecution.
Why other options are wrong
A. Constitutional law: This governs the interpretation and application of a nation’s constitution, not the punishment of crimes.
B. Common law: This is a body of law developed through judicial decisions rather than statutes, covering both civil and criminal matters.
D. Procedural law: This governs the processes and rules courts follow in legal proceedings, but it does not define or punish crimes.
Any source of law that a court must follow when deciding a case
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Binding authority
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Common law
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Apparent authority
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Stare decisis
Explanation
Correct Answer:
A. Binding authority
Explanation
Binding authority refers to any legal source, such as statutes, regulations, or higher court decisions, that a court must follow when making rulings.
Why other options are wrong
B. Common law: A legal system based on judicial decisions, but not necessarily binding in all cases.
C. Apparent authority: A concept in agency law where a principal is bound by an agent’s actions, unrelated to court decisions.
D. Stare decisis: The principle of following precedent, but it does not refer to all binding sources of law.
A specific type of investment company that continually buys or sells to investors shares of ownership in a portfolio
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Fungible goods
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Notary public
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Courts of equity
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Mutual fund
Explanation
Correct Answer:
D. Mutual fund
Explanation
A mutual fund is an investment vehicle that pools money from multiple investors to buy a diversified portfolio of stocks, bonds, or other securities. Investors can buy or sell shares in the fund at any time.
Why other options are wrong
A. Fungible goods: Goods that are interchangeable with other goods of the same type, such as grains or oil, not an investment company.
B. Notary public: A person authorized to witness and certify documents, not related to investments.
C. Courts of equity: Legal institutions that provide remedies other than monetary damages, unrelated to investment funds.
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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.