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Kaplan University ACCT 505 - Unit 2 Exam Answers (13, 14, 15)

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Question;Chapter 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 $499;2. 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 fraud;3. 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 consumer;5. 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 product;Chapter 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.

 

Paper#43044 | Written in 18-Jul-2015

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