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1.	T F. An indorser of a check is secondarily liable for the amount of the check he indorses.

2. T F. An accountant’s liability is not limited to clients.

3.	T F. Chapter 13 bankruptcy can be either voluntary or involuntary. 

4.	T F. Declared dividends are debts of the corporation owed to the shareholders.

5. T F. Employers could be liable for torts committed by employees if the employees were acting within the scope of their employment.

6. T F. The formula for Coca-Cola is an example of a trademark. 

7. T F. The Age Discrimination in Employment Act prohibits workplace discrimination against employees 40 years of age and younger. 

8. T F. A chapter seven bankruptcy is also known as a consumer debt adjustment.

9. T F. A check is an example of a negotiable instrument. 

10. T F. The tender offer defense where the target company makes a tender offer on the raider’s shares is called pacman.

11. T F. A principal is not usually liable for any torts committed by independent contractors.

12.	T F. Stock in close corporations is not available to the public.

13.	T F. Shareholders have a right to inspect corporate records.

14. T F. Telemarketers are allowed to call private residences at any time of day.

15.	T F. An agent is usually liable on contracts made on behalf of the principal.

Section II. Multiple Choice. Choose the best answer. Answer A, B, C, or D on the answer sheet provided. 6 points each. 162/300 total points

16. Which is true of a check “payable to the order of Snow White” with a blank indorsement (signed on the back of the check as “Snow White”)? 

A. It is bearer paper.
B. The indorser is primarily liable for the amount of the check.
C. Both A and B.
D. Neither A nor B.

17. Close corporations use the right of first refusal to ____________.

A. Pierce the corporate veil
B. Control minority shareholders
C.	Manage the company like a partnership
D.	Prevent outsiders from buying their stock

18. Title VII prohibits employment discrimination based on: 

A. Age 
B. Disability
C. Race
D. Marital status

19. Express authority is a type of 

A. Actual authority
B. Implied authority
C. Apparent authority
D. None of the above

20. Catherine is the only owner of Cakes4U, Inc. and often writes checks for her dance lessons and home mortgage payment from the company account. She is also committing fraud and using improper accounting at Cakes4U to hide that. Under what theory could Catherine be personally liable for the debts of the corporation?

A.	The Commerce Clause
B.	Partnership by Estoppel
C.	Piercing the Corporate Veil
D.	The De Facto Corporation

21. __________________________ protects the quality of water used for drinking purposes. 

A. The Ocean Dumping Ban Act
B. The Safe Drinking Water Act
C. The Clean Water Act
D. The Marine Protection, Research, and Sanctuaries Act

22. A disadvantage of a S Corporation is

A. Double taxation
B. Limited liability
C. Unlimited liability
D. None of the above

23. Under SUPERFUND, the EPA can require that a site be cleaned up by:

A.	The owner or operator of the site and the owner of wastes deposited at the site
B.	The owner or operator of the site and transporters of wastes to the site
C.	Both A and B
D.	Neither A nor B. The EPA cannot require anyone to pay for the clean up of the site.

24. A disadvantage of a sole proprietorship is

A. Double taxation
B. Limited liability
C. Unlimited liability
D.	Control of the business

25. A ________ is liable only if the principal defaults on the loan.

A. Principal
B. Surety
C. Agent
D. Guarantor

26. Even if an agent is fired, the agent could still have ___________ to act on behalf of the principal.

A. Implied authority
B. Express authority
C. Apparent authority
D. The agent has no authority after employment is terminated.

27. Which of the following forbids sex discrimination regarding pay? 

A. Title VII
B. The Equal Pay Act
C. Section 1981
D. A & B only

28. Two years ago, Cinderella bought a house, financing it through Wicked Stepmother’s Financing Inc. Wicked Stepmother’s Financing Inc. has a security interest in the house. Cinderella can no longer make the payments because she lost her job making glass slippers. Wicked Stepmother’s Financing Inc. is threatening to foreclose on her property. What type of contract is this?

A. A mortgage
B. A land contract
C. A deed of trust
D. An option contract

29. Oppressive child labor is prohibited by the _______________. 

A. Fair Labor Standards Act
B. National Labor Relations Act
C. Social Security Act

30. Which type of intellectual property protects books, movies, and artwork?

A. Patent
B. Copyright
C. Trademark
D. Trade secrets

31. The Family and Medical Leave Act applies to employers with ________ or more employees.

A. 2
B. 20
C. 50
D. 100

32. The shareholders elect the ______________ to manage the corporation. 

A. Board of Directors
B. Officers except the president
C. Shareholder litigation committee
D. Officers including the president

33. Before Cakes4U was incorporated, the promoter, Catherine, made several contracts on its behalf. Who is liable on the contracts made prior to incorporation? 

A. Cakes4U 
B. An incorporator
C. Catherine
D. All of the above

34. Which type of creditor would be paid first if the debtor files for bankruptcy?

A. Unsecured creditors
B. Priority creditors
C. Secured creditors
D. All creditors are equal

35. Which type of intellectual property protects symbols used to identify goods with certain manufacturers?

A. Copyright 
B. Trademark
C. Trade secret 
D. Patent 

36. Sean O’Shaughnessy owed $200.25 to Larry Leprechaun in exchange for gold. Sean paid with this check.

Pay to the order of Larry Leprechaun	 $2000.25
Two hundred and 25/100 dollars----	 Sean O’Shaughnessy

When Larry looked at the check, he noticed that Sean wrote two different amounts on the check and became very excited. Which amount will the bank honor? 

A.	$200.25
B.	$2000.25
C.	Neither. The check will be void.
D.	Instead of immediately honoring the check, the bank must call Sean to clarify the amount.

37. A reorganization is also known as a 

A.	Chapter 7 Bankruptcy
B.	Chapter 11 Bankruptcy
C.	Straight Bankruptcy
D.	Chapter 13 Bankruptcy

38. Which of the following are duties of a partner to the partnership?

A. Duty of care, duty to account, & duty to act within actual authority
B. Duty to be indemnified for personal expenses & duty to incorporate
C. Duty to ratify & duty to pierce the corporate veil
D. All of the above	

39. The Sarbanes-Oxley Act of 2002 bans which types of services by audit firms for audit clients?

A. Actuarial services 
B. Bookkeeping
C. Both A and B
D. Neither A nor B

40. A _________________ is limited to one project.

A.	Joint venture
B.	S Corporation
C.	Partnership
D.	Corporation

41. Advertising and goodwill of the trademark are advantages of which form of business?

A.	 Partnership
B.	Franchise
C.	Sole proprietorship
D.	S Corporation

42. A principal can be liable on contracts made by an agent due to ________________.

A.	 Actual authority
B.	 Apparent authority 
C.	Ratification 
D.	All of the above


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