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Kaplan ACCT 503 Practice Exam Unit 9,10,11,13,14,15,16, 17, 18, 19, 20, 23, 24, 28,29 31




Question;Chapter 9 -- Practice ExamMatching QuestionsMatch the following terms with their definitions:A. Implied contractB. Mirror image rule.C. OffereeD. OfferorE. Bilateral contract1. A party that makes an offer.2. An agreement based on one promise in exchange for another.3. A party that receives and offer.4. An agreement based on the words and actions of the parties.5. A common law principle requiring the acceptance to be on exactly the terms of the offer.True/False QuestionsCircle true or false:1. T F To be enforceable, all contracts must be in writing.2. T F Abdul hires Sean to work in his store, and agrees to pay him $9 per hour. This agreement is governed by the Uniform Commercial Code.3. T F If an offer demands a reply within a stated period, the offeree's silence indicates acceptance.4. T F Without a meeting of the minds there cannot be a contract.5. T F An agreement to sell cocaine is a voidable contract.Multiple-Choice Questions1. Mark, a newspaper editor, walks into the newsroom and announces to a group of five reporters: ?I?ll pay a $2,000 bonus to the first reporter who finds definitive evidence that Senator Blue smoked marijuana at the celebrity party last Friday.? Anna, the first reporter to produce the evidence, claims her bonus based on(a) Unilateral contract.(b) Promissory estoppel.(c) Quasi-contract.(d) Implied contract.(e) Express contract.2. Raul has finished the computer installation he promised to perform for Tanya, and she has paid him in full. This is(a) An express contract.(b) An implied contract.(c) An executed contract.(d) A bilateral contract.(e) No contract.3. Consider the following:I. Madison says to a group of students, "I'll pay $35 to the first one of you who shows up at my house and mows my lawn."II. Lea posts a flyer around town that reads, "Reward: $500 for information about the person who keyed my truck last Saturday night in the Wag-a-Bag parking lot. Call Lea at 555-5309."Which of these proposes a unilateral contract?(a) I only(b) II only(c) Both I and II(d) None of the above4. On Monday night, Louise is talking on her cell phone with Bill. ?I?m desperate for a manager in my store,? says Louise. ?I?ll pay you $45,000 per year, if you can start tomorrow morning. What do you say???It?s a deal,? says Bill. ?I can start tomorrow at 8 a.m. I?ll take $45,000 and I also want 10 percent of any profits you make above last year?s.? Just then Bill loses his cell phone signal. The next morning he shows up at the store, but Louise refuses to hire him. Bill sues. Bill will(a) Win, because there was a valid offer and acceptance.(b) Win, based on promissory estoppel.(c) Lose, because he rejected the offer.(d) Lose, because the agreement was not put in writing.(e) Lose, because Louise revoked the offer.5. Which of the following amounts to an offer?(a) Ed says to Carmen, "I offer to sell you my pen for $1."(b) Ed says to Carmen, "I'll sell you my pen for $1."(c) Ed writes, "I'll sell you my pen for $1," and gives the note to Carmen. (d) All of the aboveChapter 10-- Practice ExamMatching Questions.Match the following terms with their definitions:A. FraudB. RestitutionC. Part performanceD. Exculpatory clauseE. Consideration 1. A contract clause intended to relieve one party from potential tort liability2. The idea that contracts must be a two way street3. The intention to deceive the other party4. Restoring the other party to its original position5. Entry onto land, or improvements made to it, by a buyer who has no written contractTrue/False QuestionsCircle true or false:1. T F A contract may not be rescinded based on puffery.2. T F An agreement for the sale of a house does not need to be in writing if the deal will be completed within one year.3. T F Noncompete clauses are suspect because they tend to restrain free trade.4. T F A seller of property must generally disclose latent defects that he knows about.5. T F A court is unlikely to enforce an exculpatory clause included in a contract for surgery.6. T F An agreement for the sale of 600 plastic cups, worth $0.50 each, must be in writing to be enforceable.Multiple-Choice Questions1. In which case is a court most likely to enforce an exculpatory clause?(a) Dentistry(b) Hang gliding(c) Parking lot(d) Public transportation(e) Accounting2. Sarah, age 17, uses $850 of her hard-earned, summer-job money to pay cash for a diamond pendant for the senior prom. She has a wonderful time at the dance but decides the pendant was an extravagance, returns it, and demands a refund. The store has a ?no refund? policy that is clearly stated, on a sign on the wall. There was no defect in the pendant. The store refuses the refund. When Sarah sues, she will(a) Win $850(b) Win $425(c) Win, but only if she did not notice the ?no refund? policy(d) Win, but only if she did not think the ?no refund? policy applied to her(e) Lose3. Tobias is selling a surrealist painting. He tells Maud that the picture is by the famous French artist Magritte, although in fact Tobias has no idea whether that is true or not. Tobias?s statement is(a) Bilateral mistake(b) Unilateral mistake(c) Fraud(d) Innocent Misrepresentation(e) Legal, as long as he acted in good faith4. Louise e-mails Sonya, ?I will sell you my house at 129 Brittle Blvd. for $88,000, payable in one month. Best, Louise.? Sonya e-mails back, ?Louise, I accept the offer to buy your house at that price. Sonya.? Neither party prints a copy of the two e-mails.(a) The parties have a binding contract for the sale of Louise?s house.(b) Louise is bound by the agreement but Sonya is not.(c) Sonya is bound by the agreement but Louise is not.(d) Neither party is bound because the agreement was never put in writing.(e) Neither party is bound because the agreement was never signed.(e) An adhesion contract5. In February, Chuck orally agrees to sell his hunting cabin, with 15 acres, to Kyle for $35,000, with the deal to be completed in July, when Kyle will have the money. In March, while Chuck is vacationing on his land, he permits Kyle to enter the land and dig the foundation for a new cottage. In July, Kyle arrives with the money but Chuck refuses to sell. Kyle sues.(a) Chuck wins because the contract was never put in writing.(b) Chuck wins because the contract terms were unclear.(c) Kyle wins because a contract for vacation property does not need to be written.(d) Kyle wins because Chuck allowed him to dig the foundation.(e) Kyle wins because Chuck has committed fraud.6. Ted's wallet is as empty as his bank account, and he needs $3500 immediately. Fortunately, he has three gold coins that he inherited from his grandfather. Each is worth $2500, but it is Sunday, and the local rare coins store is closed. When approached, Ted's neighbor Andrea agrees to buy the first coin for $2300. Another neighbor, Cami, agrees to buy the second for $1100. A final neighbor, Lorne, offers "all the money I have on me" - $100 ? for the last coin. Desperate, Ted agrees to the proposal. Which of the deals is supported by consideration?(a) Ted's agreement with Andrea, only(b) Ted's agreements with Andrea and Cami, only(c) All three of the agreements(d) None of the agreementsChapter 11 -- Practice ExamMatching QuestionsMatch the following terms with their definitions:A. MaterialB. Intended beneficiaryC. DischargedD. Consequential1. A type of breach that substantially harms the innocent party.2. When a party has no more obligations under a contract.3. Damages that can be recovered only if the breaching party should have foreseen them.4. A third party who should be able to enforce a contract between two others.True/False QuestionsCircle true or false:1. T F Contract dates and deadlines are strictly enforceable unless the parties agree otherwise.2. T F Where one party has clearly breached, the injured party must mitigate damages3. T F Courts award the expectation interest more often than any other remedy.4. T F A party who delegates duties remains liable for contract performance.Multiple-Choice Questions1. Bob, a mechanic, claims that Cathy owes him $1,500 on a repair job. Bob wants to assign his claim to Hardknuckle Bank. The likeliest reason that Bob wants to do this is(a) Cathy also owes Hardknuckle Bank money.(b) Hardknuckle Bank owes Bob money on a consumer claim.(c) Hardknuckle Bank owes Bob money on a repair job.(d) Bob owes Hardknuckle Bank money.(e) Bob and Cathy are close friends.2. The agreement between Bob and Cathy says nothing about assignment. May Bob assign his claim to Hardknuckle?(a) Bob may assign his claim but only with Cathy?s agreement.(b) Bob may assign his claim, but only if Cathy and Hardknuckle agree.(c) Bob may assign his claim without Cathy?s agreement.(d) Bob may assign his claim but Cathy may nullify the assignment.(e) Bob may not assign his claim because it violates public policy.3. Jody is obligated under a contract to deliver 100,000 plastic bottles to a spring water company. Jody?s supplier has just gone bankrupt, any other suppliers will charge her more than she expected to pay. This is(a) Consequential damages(b) Impossibility(c) Expectation interest(d) Substantial performance(e) Legally irrelevant4. An example of true impossibility is(a) Strict performance(b) Failure of condition(c) Illegality(d) Material breach(e) Consequential interest5. Museum schedules a major fundraising dinner, devoted to a famous Botticelli picture, for September 15. Museum then hires Sue Ellen to restore the picture, her work to be done no later than September 14. Sue Ellen is late with the restoration, forcing the Museum to cancel the dinner and lose at least $500,000 in donations. Sue Ellen delivers the picture, in excellent condition, two weeks late. Museum sues.(a) Museum will win.(b) Museum will win if, when the parties made the deal, Sue Ellen knew the importance of the date.(c) Museum will win provided that it was Sue Ellen?s fault she was late.(d) Museum will win provided that it was not Sue Ellen?s fault she was late.(e) Museum will lose.6. Tara is building an artificial beach at her lakefront resort. She agrees in writing to buy 1,000 tons of sand from Frank for $20 per ton, with delivery on June 1, at her resort. Frank fails to deliver any sand, and Tara is forced to go elsewhere. She buys 1,000 tons from Maureen at $25 per ton, and then is forced to pay Walter $5,000 to haul the sand to her resort. Tara sues Frank. Tara will recover(a) Nothing(b) $5,000(c) $10,000(d) $15,000(e) $30,000Chapter 13 -- Practice ExamMatching QuestionsMatch the following terms with their definitions:A. Additional terms B. Strict liability C. Merchantability D. Different terms 1. An implied warranty that goods are fit for their ordinary purpose.2. Generally become part of a contract between merchants.3. The reasonableness of defendant?s conduct is irrelevant.4. Generally cancel each other out.True/False QuestionsCircle true or false:1. T F In a contract for the sale of goods, the offer may include any terms the offeror wishes, the offeree must accept on exactly those terms or reject the deal. 2. T F Sellers can be bound by written warranties but not by oral statements. 3. T F Under strict liability, an injured consumer could potentially recover damages from the product?s manufacturer and the retailer who sold the goods. 4. T F A contract for the sale of $300 worth of decorative stone must be in writing to be enforceable. Multiple-Choice Questions1. Which one of the following transactions is not governed by Article 2 of the UCC?(a) Purchasing an automobile for $35,000(b) Leasing an automobile worth $35,000(c) Purchasing a stereo worth $501(d) Purchasing a stereo worth $4992. Marion orally agrees to sell Ashley her condominium in Philadelphia for $700,000. The parties have known each other for 20 years and do not bother to put anything in writing. Based on the agreement, Marion hires a moving company to pack up all her goods and move them to a storage warehouse. Ashley shows up with a cashier?s check, and Marion says, ?You?re going to love it here.? But at the last minute, Marion declines to take the check and refuses to sell. Ashley sues and wins (a) Nothing(b) The condominium(c) $700,000(d) The difference between $700,000 and the condominium?s market value(e) Damages for fraud3. Seller?s sales contract states that ?The model 8J flagpole will withstand winds up to 150 mph, for a minimum of 35 years.? The same contract includes this: ?This contract makes no warranties, and any implied warranties are hereby disclaimed.? School buys the flagpole, which blows down six months later, in a 105-mph wind. (a) Seller is not liable because it never made any express warranties.(b) Seller is not liable because it disclaimed any warranties.(c) Seller is liable because the disclaimer was invalid. (d) Seller is liable because implied warranties may not be disclaimed.4. Manufacturer sells a brand-new, solar-powered refrigerator. Because the technology is new, Manufacturer sells the product ?as is.? Plaintiff later sues Manufacturer for breach of warranty and wins. Plaintiff is probably (a) A distributor with no understanding of legal terminology(b) A retailer who had previously relied on Manufacturer(c) A retailer who had never done business before with Manufacturer(d) A retailer who failed to notice the ?as is? label(e) A consumer5. CPA QUESTION: To establish a cause of action based on strict liability in tort for personal injuries resulting from using a defective product, one of the elements the plaintiff must prove is that the seller (defendant)(a) Failed to exercise due care(b) Was in privity of contract with the plaintiff(c) Defectively designed the product(d) Was engaged in the business of selling the productChapter 14 -- Practice ExamMatching QuestionsMatch the following terms with their definitions:A. DrawerB. DraweeC. IssuerD. MakerE. Holder 1. Someone who issues a promissory note2. The person who issues a draft3. The person who pays a draft4. Anyone in possession of an instrument if it is indorsed to her5. The maker of a promissory note or the drawer of a draft.True/False QuestionsCircle true or false:1. T F The possessor of a piece of commercial paper always has an unconditional right to be paid.2. T F Three parties are involved in a draft.3. T F To be negotiable, bearer paper must be indorsed and delivered to the transferee.4. T F Negotiation means that an instrument has been transferred to the holder by the issuer.5. T F A promissory note may be valid even if it does not have a specific due date.Multiple-Choice Questions1. CPA QUESTION: In order to negotiate bearer paper, one must:(a) Indorse the paper(b) Indorse and deliver the paper with consideration(c) Deliver the paper(d) Deliver and indorse the paper2. The possessor of a piece of order paper does not have an unconditional right to be paid if:(a) The paper is negotiable.(b) The possessor is the payee.(c) The paper has been indorsed to the possessor.(d) The possessor is a holder in due course.(e) The issuer changed his mind after signing the instrument.3. An instrument is negotiable unless:(a) It is in writing.(b) It is signed only by the drawee.(c) It contains an order to pay.(d) It is payable on demand.(e) It is payable only to bearer.4. Chloe buys a motorcycle on eBay from Junior. In payment she gives him a promissory note for $7,000. He immediately negotiates the note to Terry. After the motorcycle arrives, Chloe discovers that it is not as advertised. One week later, she notifies Junior. She still has to pay Terry because:(a) On eBay, the rule is ?buyer beware.?(b) Terry?s rights are not affected by Junior?s misdeeds.(c) Terry indorsed the note.(d) Chloe is the drawee.(e) Chloe waited too long to complain.5. Donna gives a promissory note to C. J. Which of the following errors would make the note invalid?(a) The instrument was written on a dirty sock.(b) The instrument promised to pay 15,000 euros.(c) The note stated that Donna owed C. J. ?$1,500: One thousand and five dollars.?(d) Donna signed the note without reading it.(e) The due date was specified as ?three months after Donna graduates from college.?Chapter 15 --Practice ExamMatching QuestionsMatch the following terms with their definitions:A. Attachment.B. BIOC.C. Perfection.D. PMSI.E. Priority.1. Someone who buys goods in good faith from a seller who deals in such goods.2. Steps necessary to make a security interest valid against the whole world.3. A security interest taken by the person who sells the collateral or advances money so the debtor can buy it.4. The order in which creditors will be permitted to seize the property of a bankrupt debtor.5. Steps necessary to make a security interest valid against the debtor, but not against third parties.True/False QuestionsCircle true or false:1. T F A party with a perfected security interest takes priority over a party with an unperfected interest.2. T F A buyer in ordinary course of business takes goods free of an unperfected security interest, but does not take them free of a perfected security interest.3. T F When a debtor defaults, a secured party may seize the collateral and hold it, using reasonable care, but may not sell or lease it.4. T F A party may take a security interest in tangible things, such as goods, but not in intangible things, such as bank accounts.5. T F Without an agreement of the parties there can be no security interest.Multiple-Choice Questions1. CPA QUESTION: Under the UCC Secured Transactions Article, perfection of a security interest by a creditor provides added protection against other parties in the event the debtor does not pay its debts. Which of the following parties is not affected by perfection of a security interest?(a) Other prospective creditors of the debtor.(b) The trustee in a bankruptcy case.(c) A buyer in the ordinary course of business.(d) A subsequent personal injury judgment creditor.2. CPA QUESTION: Mars, Inc., manufactures and sells Blu Ray players on credit directly to wholesalers, retailers, and consumers. Mars can perfect its security interest in the goods it sells without having to file a financing statement or take possession of the Blu Ray players if the sale is made to which of the following:(a) Retailers.(b) Wholesalers that sell to distributors for resale.(c) Consumers.(d) Wholesalers that sell to buyers in ordinary course of business.3. Bank has loaned unsecured money to Retailer, which still owes $700,000. Bank becomes nervous that Retailer is on the verge of bankruptcy, and sends a ?notice of security interest? to Retailer, claiming a security interest in all inventory and real estate of Retailer. Retailer does not respond. Bank files its notice in the state?s central filing office. When Retailer goes bankrupt, Bank(a) Has a perfected security interest in the inventory but not the real estate.(b) Has a perfected security interest in the real estate but not the inventory.(c) Has a perfected security interest in both the real estate and the inventory.(d) Has no security interest in either the real estate or the inventory.(e) Has an unperfected security interest in both the real estate and the inventory.4. Which case does not represent a purchase money security interest?(a) Auto dealer sells consumer a car on credit.(b) Wholesaler sells retailer 5,000 pounds of candy on credit.(c) Bank lends money to Retailer, using Retailer?s existing inventory as collateral.(d) Bank lends money to auto dealer to purchase 150 new cars, which are the collateral.(e) Consumer applies to credit agency for loan with which to buy a yacht.5. Millie lends Arthur, her next-door neighbor, $25,000. He gives her his diamond ring as collateral for the loan. Which statement is true?(a) Millie has no valid security interest in the ring because the parties did not enter into a security agreement. (b) Millie has no valid security interest in the ring because she has not filed appropriate papers.(c) Millie has an attached, unperfected security interest in the ring.(d) Millie has an attached, unperfected security interest in the ring but can perfect her interest by filing.(e) Millie has an attached, perfected security interest in the ring.Chapter 16-- Practice ExamMatching QuestionsMatch the following terms with their definitions:A. DischargeB. Fraudulent transferC. Exempt propertyD. ReaffirmationE. Voidable preference1. Property individual debtors can keep for themselves2. Debtors are not liable for money owed before the filing3. Debtors promise to pay a debt after discharge4. Payment to a creditor immediately before filing5. Payment made within the year before a petition is filed with the goal of hindering creditorsTrue/False QuestionsCircle true or false:1. T F One of the primary goals of the Code is to teach the debtor a lesson.2. T F Each of the Code?s chapters has one of two objectives?rehabilitation or liquidation.3. T F A creditor is not permitted to force a debtor into bankruptcy.4. T F The bankruptcy court issues an order for relief to give the debtor a chance to file a petition.5. T F The Code permits individual debtors (but not organizations) to keep some property for themselves.Multiple-Choice Questions1. CPA QUESTION: Decal Corp. incurred substantial operating losses for the past three years. Unable to meet its current obligations, Decal filed a petition of reorganization under Chapter 11 of the federal Bankruptcy Code. Which of the following statements is correct?(a) A creditors? committee, if appointed, will consist of unsecured creditors.(b) The court must appoint a trustee to manage Decal?s affairs.(c) Decal may continue in business only with the approval of a trustee.(d) The creditors? committee must select a trustee to manage Decal?s affairs.2. CPA QUESTION: A voluntary petition filed under the liquidation provisions of Chapter 7 of the federal Bankruptcy Code:(a) Is not available to a corporation unless it has previously filed a petition under the reorganization provisions of Chapter 11 of the Code.(b) Automatically stays collection actions against the debtor except by secured creditors.(c) Will be dismissed unless the debtor has 12 or more unsecured creditors whose claims total at least $5,000.(d) Does not require the debtor to show that the debtor?s liabilities exceed the fair market value of assets.3. CPA QUESTION: Unger owes a total of $50,000 to eight unsecured creditors and one fully secured creditor. Quincy is one of the unsecured creditors and is owed $6,000. Quincy has filed a petition against Unger under the liquidation provisions of Chapter 7 of the federal Bankruptcy Code. Unger has been unable to pay debts as they become due. Unger?s liabilities exceed Unger?s assets. Unger has filed papers opposing the bankruptcy petition. Which of the following statements regarding Quincy?s petition is correct?(a) It will be dismissed because the secured creditor failed to join in the filing of the petition.(b) It will be dismissed because three unsecured creditors must join in the filing of the petition.(c) It will be granted because Unger?s liabilities exceed Unger?s assets.(d) It will be granted because Unger is unable to pay Unger?s debts as they become due.4. A debtor is not required to file the following document with his voluntary petition:(a) Budget statement for the following three years.(b) Statement of financial affairs.(c) List of creditors.(d) Claim of exemptions.(e) Schedule of income and expenditures5. Grass Co. is in bankruptcy proceedings under Chapter 11. _____________ serves as trustee. In the case of ______________ the court can approve a plan of reorganization over the objections of the creditors. (a) the debtor in possession/a cramdown(b) A person appointed by the U.S. Trustee/fraud(c) The head of the creditors? committee/reaffirmation(d) U.S. Trustee/voidable preferenceChapter 23-- Practice ExamMatching QuestionsMatch the following terms with their definitions:A. Securities Act of 1933.B. Section 16C. Sarbanes-Oxley.D. Section 10(b).E. Securities Exchange Act of 1934.1. Prohibits fraud in connection with the purchase and sale of a security.2. Regulates companies once they have gone public.3. Requires officers to certify their company?s financial statements.4. Regulates the issuance of securities.5. Requires an insider to turn over profits she has earned from buying and selling or selling and buying company stock in a 6 month period.True/False QuestionsCircle true or false:1. T F Before permitting a company to issue new securities, the SEC investigates to ensure that the company has a promising future.2. T F Small offerings of securities do not need to be registered with the SEC.3. T F Horizontal price-fixing is legal as long as it does not have an anticompetitive impact.4. T F Only the federal government regulates securities offerings, the states do not.5. T F It is legal for a company to sell its product at a price below cost as long as it does not intend to drive competitors out of business.Multiple-Choice Questions1 Under Regulation D, an issuer:(a) May not sells to a thousand accredited investors.(b) May not sells to 27 unaccredited investors.(c) Must make disclosure to accredited investors.(d) Must make disclosure to unaccredited investors.(e) May advertise the stock publicly.2. Which of the following statements is not true about a public offering?(a) The issuer files a registration statement with the SEC.(b) The issuer files a prospectus with the SEC.(c) Company officers may make public statements about the offering before the stock is sold. (d) Company officers may make public statements about the offering after the stock is sold.(e) The issuer may solicit offers for the stock before the effective date.3. To have an illegal monopoly, a company must:I. Control the market.II. Maintain its control improperly.III. Have a market share greater than 50 percent.(a) I, II, and III.(b) I and II.(c) II and III.(d) I and III.(e) Neither I, II, nor III.4. Lloyd sold car floor mats to Mercedes dealerships. Then Mercedes began to include floor mats as standard equipment. Mercedes has a 10 percent share of the luxury car market.(a) Mercedes has created an illegal tying arrangement because floor mats and cars are separate products.(b) Mercedes has not created an illegal tying arrangement because it does not have significant power in the luxury car market.(c) Mercedes has not created an illegal tying arrangement because it is not tying the two products together.(d) Mercedes has created an illegal tying arrangement because it controls the market in floor mats.5. Mike is director of sales for his company. He negotiates prices with Paige and Lauren, who work for two of his biggest customers. Paige tells him that she can buy the same product cheaper elsewhere. He cuts the price for her, but not for his other customers. At the same time, he develops a crush on Lauren, so offers to sell her the product at a lower price. In subsequent months, these two customers come to dominate the market. Which statement is correct:(a) Mike can charge whatever price he wants to any customer.(b) Mike must charge all his customers the same price.(c) The price cut to Paige, but not Lauren, is legal.(d) The price cut to Lauren, but not Paige, is legal.(e) Mike is not required to charge all his customers the same price, but neither of these price cuts is legal.Chapter 17 --Practice ExamMatching QuestionsMatch the following terms with their definitions:A. Term agreementB. Apparent authorityC. Agency at willD. A duty of an agentE. Implied authority 1. When two parties make no agreement in advance about the duration of their agreement2. When an agent has authority to do acts that are necessary to accomplish an assignment3. When two parties agree in advance on the duration of their agreement4. When behavior by a principal convinces a third party that the agent is authorized, even though she is not5. Duty of loyaltyTrue/False QuestionsCircle true or false:1. T F A principal is always liable on a contract, whether he is fully disclosed, unidentified, or undisclosed.2. T F When a contract goes wrong, a third party can always recover damages from the agent, whether the principal is fully disclosed, unidentified, or undisclosed.3. T F An agent may receive profits from an agency relationship even if the principal does not know about the profits, as long as the principal is not harmed.4. T F An agent may never act for two principals whose interests conflict.5. T F An agent has a duty to provide the principal with all information in her possession that she has reason to believe the principal wants to know, even if he does not specifically ask for it.Multiple-Choice Questions1. Someone painting the outside of a building you own crashed through a window, injuring a visiting executive. Which of the following questions would your lawyer not need to ask to determine if the painter was your servant?(a) Did the painter work full-time for you?(b) Had you checked the painter?s references?(c) Was the painter paid by the hour or the job?(d) Were you in the painting business?(e) Did the painter consider herself your employee?2. Which of the following duties does an agent not owe to her principal?(a) Duty of loyalty(b) Duty to obey instructions(c) Duty to reimburse(d) Duty of care(e) Duty to provide information3. Finn learns that, despite his stellar record, he is being paid less than other salespeople at Barry Co. So he decides to start his own company. During his last month on the Barry payroll, he tells all of his clients about his new business. He also tells them that Barry is a great company, but his fees will be lower. After he opens the doors of his new business, most of his former clients move with him. Is Finn liable to Barry?(a) No, because he has not been disloyal to Barry -- he praised the company.(b) No, because Barry was underpaying him.(c) No, because his clients have the right to hire whichever company they choose. (d) Yes, Finn has violated his duty of loyalty to Barry.4. Kurt asked his car mechanic, Quinn, for help in buying a used car. Quinn recommends a Ford Focus that she has been taking care of its whole life. Quinn was working for the seller. Which of the following statements is true?(a) Quinn must pay Kurt the amount of money she received from the Ford's prior owner.(b) After buying the car, Kurt finds out that it needs $1,000 in repairs. He can recover $1000 from Quinn, but only if Quinn knew about the needed repairs before Kurt bought the car.(c) Kurt cannot recover anything because Quinn had no obligation to reveal her relationship with the car?s seller.(d) Kurt cannot recover anything because he had not paid Quinn for her help5. Figgins is the dean of a college. He appointed Sue acting dean while he was out of the country and posted a message on the college web site announcing that she was authorized to act in his place. He also told Sue privately that she did not have the right to make admissions decisions. While Figgins was gone, Sue overruled the admissions committee to admit the child of a wealthy alumnus. Does the child have the right to attend this college?(a) No, because Sue was not authorized to admit him.(b) No, because Figgins was an unidentified principal.(c) Yes, because Figgins was a fully disclosed principal.(d) Yes, because Sue had apparent authority.6. CPA QUESTION A principal will not be liable to a third party for a tort committed by an agent:(a) Unless the principal instructed the agent to commit the tort(b) Unless the tort was committed within the scope of the agency relationship(c) If the agency agreement limits the principal?s liability for the agent?s tort(d) If the tort is also regarded as a criminal actChapter 18 --Practice ExamMatching QuestionsMatch the following terms with their definitions:A. Employee at will.B. Public policy rule.C. FLSA.D. Wrongful discharge.E. OSHA.F. Whistleblower. 1. A federal statute that ensures safe working conditions.2. When an employee is fired for a bad reason.3. An employee who discloses illegal behavior on the part of his employer.4. An employee without an explicit employment contract.5. A federal statute that regulates wages and limits child labor.6. An employer may not fire a worker for a reason that violates basic social rights, duties or responsibilities.True/False QuestionsCircle true or false:1. T F An employee may be fired for a good reason, a bad reason, or no reason at all.2. T F An employee may be fired if she disobeys a direct order from her boss not to join a labor union.3. T F Promises made by the employer during the hiring process are not enforceable.4. T F In some states, an employer is not liable for false statements they make about former employees unless they know these statements are false or are primarily mot


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