CPA Regulation Practice Questions
1. In a lawsuit, a plaintiff sues a seller, claiming the seller's product injured the plaintiff. The plaintiff establishes:
1. The seller was engaged in the business of selling the product.
2. The product that the seller sold was defective.
3. The product's defect was unreasonably dangerous to the plaintiff.
4. The defect caused injury to the plaintiff.
Under the theory of strict liability, the seller will be held liable:
a. If the seller was negligent.
b. If the seller was at fault for the product's defect.
c. If both A and B are proven
d. If either A or B is the case
2. According to the Securities Act of 1933, if a public issuer of stock has made a registered offering, how often must the issuer file a Form 10-K with the SEC?
a. Only once
b. Every six months
c. Annually
d. Never
3. Party A submitted a bid for a job. Party B accepted the bid. The bid included an error. Which of the following statements is correct?
I. Party A can void the contract no matter what other conditions exist.
II. Party A can void the contract if Party B was aware of the error.
III. Party A can void the contract if the error was so large that Party B should have been aware of the error.
a. I
b. I and II
c. II and III
d. I, II, and III
4. Which of the following are considered a consulting service?
I. Consultations and advisory services
II. Transaction services and product services
III. Implementation services
a. I and II only
b. I and III only
c. II and III only
d. I, II, and III
5. Which of the following violates the ethical standards of the CPA profession or is likely to impair a CPA's independent status?
I. Filing your own fraudulent tax return
II. Accepting large gifts from a client
III. Performing management functions for a client
a. I and II only
b. I and III only
c. II and III only
d. I, II, and III
6. Which of the following statements is correct?
a. To file a voluntary bankruptcy petition, a debtor must show that he/she has debts.
b. To file a voluntary bankruptcy petition, a debtor does not have to match a minimum number of creditors.
c. Both of the above
d. None of the above
7. Which of the following is considered fraudulent conveyance of property when a debtor owes money to a creditor?
a. Conveyance of property with the intent of defrauding the creditor
b. Conveyance of property with the intent of delaying the creditor
c. Conveyance of property with the intent of preventing the creditor from taking possession of the property
d. All of the above
8. Where the Sales Article of the UCC allocates a risk or burden between the buyer and seller "unless otherwise agreed," which of the following is true of that agreement?
a. The agreement may shift the allocation of that risk from one party to another, or onto solely one party.
b. The agreement may divide that risk between the parties.
c. Both A and B
d. Neither A nor B
9. Which of the following is necessary for an agency relationship to be terminated by operation of law?
I. If the agreement of the agency relationship becomes illegal
II. If the principal dies
III. If the principal goes bankrupt
a. I only
b. I and II only
c. II and III only
d. I, II, or III
10. In which of the following cases will an agent usually be held liable under a contract made with a third party?
I. When the principal is undisclosed
II. When the principal is partially disclosed
III. When the principal is fully disclosed
a. I and II only
b. II and III only
c. I, II, and III
d. Neither I, II, nor III
11. Which of the following statements about worker's compensation is true?
I. Worker's compensation insurance is deducted from an employee's salary.
II. Worker's compensation benefits provide for burial expenses and payments to surviving dependent children.
III. Temporary workers are generally allowed to collect worker's compensation.
a. I only
b. II only
c. III only
d. I, II, and III
12. Within the context of real estate and property law, which of the following is not necessary to gain title to land via adverse possession?
a. Open and notorious possession
b. Hostile possession
c. Actual possession
d. Statement of intent
13. Party A buys a consumer good from Party B, paying part of the balance in cash and signing a security agreement for the remainder. Party A defaults on the agreement and makes no further payments; Party B repossesses the consumer good.
Which of the following statements is true?
a. Party B must sell the consumer good if the initial deposit by Party A was greater than 60% of the good's total price
b. Party B can keep enough money from the resale of the product to match the balance owed by Party A
c. Party B can keep money from the resale of the product to cover expenses necessary to repossess and resell the consumer good
d. All of the above
14. Which of the following is necessary to have an insurance interest in property?
I. A legal interest
II. An ownership interest
III. A possibility of pecuniary loss
a. I and II
b. II and III
c. I and III
d. I, II, and III
15. What is necessary before a CPA can hand over a client's working papers?
a. The client's consent
b. A subpoena
c. Either the client's consent or a subpoena
d. Both the client's consent and a subpoena
16. Kelle sues ABC Company and proves fraud under the UCC Sales Article. She can:
a. Rescind the contract and sue ABC Company for damages that arose from the fraud.
b. Affirm the contract and sue ABC Company for damages under the tort of deceit.
c. Both a and b
d. Neither a nor b
17. Which of the following is true of Regulation D of the Securities Act of 1933?
I. It allows sales of an unlimited number of securities to accredited investors, but places a maximum dollar amount on the sales.
II. It allows sales to as many as fifty investors, provided the investors qualify as sophisticated investors under the terms of the Act.
III. It restricts resales of the securities for a time period of two years after the issuer sells the last of the securities.
a. I only
b. II only
c. III only
d. I, II, and III
18. The minimum standards that must be met for a note to be negotiable are:
a. The note must be written and signed by its maker and must contain an unconditional promise to pay a fixed amount in money.
b. The note must be payable at a definite time or on demand, and the note must be payable to order or to the bearer.
c. A and B
d. Neither A nor B
19. According to the Revised UCC Secured Transaction Article, what must a financing statement include?
a. The debtor's and creditor's names, and a description or list of the collateral
b. The creditor's signature and the location of the collateral
c. Both A and B
d. Neither A nor B
20. Party A writes a check to Party B, and writes a date on it that is a month in the future. Party B takes the check to a bank and cashes it before the date written on the check without mentioning the postdating to the bank. Which of the following statements is correct?
I. The check was not properly payable until the date that Party A wrote on it.
II. The check was not negotiable.
III. The bank is liable for cashing the check.
a. I only
b. II only
c. III only
d. I, II, and III
