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accounting questions




Question;1. Stephanie Pizza Parlor issues an instrument in favor of Pepperoni Supplies, Inc. For the instrument to be negotiable, it need NOT:a. Be an unconditional order or promise to payb. Be payable on demand or at a specified timec. Be for a fixed amount of money (or, for an amount that is ascertainable from the face of the instrument)d. Recite the consideration given in exchange for the promise to pay2. To pay local property taxes, Donny writes a check to the appropriate public agency. Which of the following is true regarding this check:The Public Agency is the: Donny is the:a. Payee Draweeb. Payee Drawerc. Drawer Indorserd. Drawee Payee3. Nadine writes a personal check for $1,000 payable to Karime on her account at Fat Cat Bank. Fat Cat Bank is the:a. Draweeb. Drawerc. Indorserd. Payee4. For accounting services she previously provided, Francesca received a check from 5782 Inc. She then indorsed it by writing ?without recourse? and signing her name. This is an example of a:a. Conditional indorsementb. Qualified indorsementc. Restrictive indorsementd. Indorsement for collection5. Rafael?s oral promise to pay $510 to Carolyn would NOT be a negotiable instrument because:a. The oral promise did not recite the consideration given (or to be given) by Carolyn in exchange for Rafael?s promise to pay $510b. A negotiable instrument must be in writingc. Rafael may have a contractual defense to Carolyn?s right to receive the $510d. The amount of the promise exceeds $5006. Carol signs an instrument in favor of David that indicates that the instrument is ?subject to an agreement dated 12/01/10 and between Carol and David.? This instrument is:a. Negotiableb. Nonnegotiable, because it refers to another agreementc. Nonnegotiable, because it is made subject to another agreementd. Nonnegotiable, because neither Carol, David nor any other party is a ?financial institution? or ?bank? (as such terms are broadly defined by the UCC)7. Natalya receives a check from Big Corp. Natalya, who needs cash, indorses the check to Quick Cash, Inc., by writing ?pay to Quick Cash, Inc., without recourse? and signing her name. This is an example of a:a. Restrictive indorsementb. Blank indorsementc. Conditional indorsementd. Special qualified indorsement8. Carolyn signs a $5,000 note payable to Steven in payment for goods (the goods are NOT consumer goods). Steven negotiates the note to Nadine, who promises to pay Steven for it in 30 days. Immediately upon receiving the note from Steven, Nadine has the rights of:a. A holder onlyb. A holder in due course (a ?HDC?)c. Both a holder and an HDCd. A guarantor9. Assume the same facts as in the prior question and assume that Carolyn has a valid breach of contract defense relating to the goods. Which of the following is true:a. Carolyn?s breach of contract defense is valid against Stevenb. Carolyn?s breach of contract defense is valid against Nadinec. If Nadine had paid Steven for the note at the time of the transfer (instead of waiting for 30 days), Nadine could hold Carolyn liable for the amount even if Carolyn had a valid breach of contract defensed. All of the aboveFACT PATTERN FOR QUESTIONS 10-12: Kareemah writes a check on his account at Bank of USA to Carol to satisfy an existing debt. Carol negotiates the check to Ninfa by special indorsement. Ninfa, in turn, negotiates the check to Heidi by special indorsement. Heidi, in turn, presents the check for payment to Bank of USA.10. Ninfa is:a. The Payeeb. Secondarily liablec. Primarily liabled. None of the above11. Before Ninfa could have signature liability on the instrument:a. The instrument must be properly and timely presented to Bank of USA for paymentb. The instrument must be dishonored by Bank of USAc. Timely notice of dishonor must be given to Ninfad. All of the above12. Assume that Kareemah had instead written the check ?payable to bearer? and then signed his name. Assume further that Carol had transferred the check without indorsement to Ninfa (and that Ninfa then negotiated the check to Heidi by special indorsement). Upon the failure of the Bank of USA to honor the check, Heidi could:a. Present the check to Ninfa for paymentb. Present the check to Carol for paymentc. Either ?a? or ?b? (i.e., Heidi has her choice to present the check to Ninfa or Carol)d. None of the above13. Which of the following documents is required to have a reasonably detailed description of the applicable collateral:a. A UCC financing statementb. An unsecured promissory notec. A security agreementd. Each of these agreements MUST provide the same level of detail when describing collateral14. Top Bank agrees to accept a check by setting aside sufficient funds to cover the amount of the check. This check would MOST LIKELY be considered:a. Conditionalb. Restrictedc. Certifiedd. Qualified15. Family Land Furniture sells household consumer goods. To create a purchase-money security interest, Family Land Furniture must:a. Extend credit for part (or all) of the purchase price of the goodsb. Refer purchasers to a qualified third-party lenderc. File a Financing Statement (UCC-1 Form) within 10 days of the sale (or before)d. Both ?a? and ?c?16. Fredi indorses a check, ?Pay to Christopher?s Clay Studios, if my ceramic vase is delivered by March 31, 2011.? This indorsement is an example of a:a. Blank indorsementb. Restrictive indorsementc. Qualified indorsementd. Artisans indorsement17. East Region Bank wants to perfect its security interest in inventory owned by Angelo Manufacturing Corp. Most likely, a UCC financing statement should be filed with:a. The Uniform Commercial Code Corporationb. The County Clerk of Courtc. The proper department of local newspapers having ?significant circulations? (as defined by the UCC)d. The Secretary of State Office in the state where Angelo Manufacturing Corp. was formed18. Mega Loan & Finance Company has a security interest in equipment held by Oliver?s Repair Inc. The security interest in the collateral:a. Essentially eliminates the need for filing financing statementb. Can only attach after Oliver?s Repair Inc. owns the applicable equipmentc. Can only be obtained by Mega Loan & Finance Company taking possession of the collaterald. Is enforceable when attachment occurs19. Rafael is a surety of Carolyn?s debt to Christopher Credit Corp. If Rafael pays Carolyn?s debt in its entirety upon Carolyn?s bankruptcy, then Rafael?s right to file a proof of claim in Carolyn?s bankruptcy case (as a result of the surety) is the right of:a. Subrogationb. Contributionc. Redemptiond. Reimbursement20. Steven and Natalya are co-sureties for Helen?s loan from Second State Bank. Steven?s right to be reimbursed by Natalya after he paid Helen?s debt to Second State Bank is the right of:a. Subrogationb. Contributionc. Redemptiond. Reimbursement21. Which of the following is FALSE:a. A surety can be liable for an obligation even if his/her agreement is not in writingb. Generally, a surety is primarily liable for the debtor?s obligationc. A surety can only be held liable if his/her agreement is in writingd. Generally, a guarantor is secondarily liable for the debtor?s obligation22. A Trustee in a bankruptcy liquidation proceeding is responsible for selling nonexempt assets and distributing the proceeds to creditors. This Trustee is most likely:a. A government employeeb. A Bankruptcy Court judgec. A U.S. Trusteed. A private individual23. Nadine owes Carlos $20,000. With a writ of attachment or execution, Carlos could satisfy this debt from Nadine?s:a. Exempt or nonexempt property (i.e., Carlos will have a choice)b. Exempt property onlyc. Nonexempt property onlyd. None of the above (i.e., Carlos must first force Nadine into bankruptcy)24. Donny sold his 5 bedroom luxury home to his brother for $6,500 (the deed and cash were exchanged simultaneously). One month later, Donny filed for bankruptcy under Chapter 7. Regarding the sale of the house, the Trustee will most likely:a. Cancel it as a fraudulent transferb. Grant Donny?s brother a security interest in the house (i.e., an automatic mortgage)c. Not be allowed to cancel it because of the ?family transfers? exemption lawsd. Not be allowed to cancel it because the asset in question one?s home25. Fifty-five days before filing his petition for bankruptcy, David makes a payment to an existing creditor (the payment represented 75% of a bona fide debt). At the time of the payment, David had several creditors. This payment will most likely be considered:a. The grant of a deemed secured interestb. A Chapter 11 dividendc. A preference paymentd. A fraudulent transfer26. Carol writes the following note on a piece of paper: ?I, the undersigned, do hereby acknowledge that I owe Jeff Thomas five hundred dollars, with interest, payable out of the proceeds of the sale of my prize dog, Spot, next month. Payment is to be made on or before six months from date.? Which of the following is TRUE?a. The note is negotiableb. Carol did not make a definite promise to payc. The note is payable at a definite timed. The note is payable to the order of Jeff Thomas27. Steven writes a check for $500 payable to ?cash.? He puts the check in his pocket and drives to his bank to cash it. As he gets out of his truck (in the bank?s parking lot), the check blows out of his pocket and falls to the ground. Minutes later, David walks by and picks up the check. Later that same day, David delivers the check to Nadine Thomas, to whom he owes $500. Nadine indorses the check ?For deposit only, [signed] Nadine Thomas? and deposits it into her checking account. Which of the following is TRUE?a. The check was never a bearer instrumentb. Steven has a right to recover the $500 from Nadinec. David?s delivery of the check to Nadine was a valid negotiationd. All of the above28. Carol takes her truck to Ian?s Truck Repair Shop. A sign in the shop clearly states that all repairs must be paid for in cash unless credit is approved in advance. Carol and Ian agree that Ian will repair Carol?s truck engine. No mention is made of credit. Ian refuses to provide Carol with an estimate because he is not sure how much repair will be necessary. Ian later repairs the engine. When Carol comes to pick up her truck, she learns that the bill is $3,000. Carol is furious and refuses to pay Ian the amount and demands possession of her truck. Which of the following is TRUE?a. To perfect his security interest, Ian should promptly return the truck to Carolb. This is an example of a potential mechanic?s lienc. This is an example of a potential artisan?s liend. Once Carol pays the $3,000 amount, she automatically waives her right to challenge the bill29. Wayne has a prize horse named Bee Lah Two. Wayne is in need of some capital so he borrows $35,000 from Oliver, who takes possession of Bee Lah Two as security for the loan. No written agreement is signed. Which of the following is TRUE?a. Oliver has a security interest in the collateralb. Oliver is a perfected secured partyc. No security interest has attached because no agreement was signedd. Both ?a? and ?b? are correct30. Steven petitioned himself into voluntary bankruptcy. There were three major claims against his estate. One was made by Carlos, a friend who held Steven?s promissory note for $5,000, one was made by Francesca, an employee who was owed two months? back wages of $9,000, and one made by Lake County Bank on an unsecured loan of $10,000. In addition, Natalya, an accountant retained by the Trustee, was owed $300, and property taxes of $2,000 were owed to Lake County. Steven?s nonexempt property was liquidated, with proceeds of $10,000. Which of the following is TRUE?a. $5,000 of the proceeds will be paid to Carlosb. $300 of the proceeds will go to Natalyac. $9,000 of the proceeds will go to Francescad. Each creditor will be paid a pro-rata amount (i.e., $10,000 times the amount owed divided by $26,300)


Paper#50838 | Written in 18-Jul-2015

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