Friday, March 07, 2008

CPA_MCQ_14

Which of the following penalties is usually imposed against an accountant who, in the course of performing professional services, breaches contract duties owed to a client?

a. Specific performance.
b. Punitive damages.
c. Money damages.
d. Rescission.

Correct Ans - c

CPA_MCQ_13

A CPA firm must do which of the following before it can participate in the preparation of an audit report of a company registered with the Securities and Exchange Commission (SEC)?

a. Join the SEC Practice Section of the AICPA.
b. Register with the Public Company Accounting Oversight Board.
c. Register with the Financial Accounting Standards Board (FASB).
d. Register with the SEC pursuant to the Securities Exchange Act of 1934.

Correct Ans - b

CPA_MCQ_12

Under Section 12 of the Securities Exchange Act of 1934, in addition to companies whose securities are traded on a national exchange, what class of companies is subject to the SEC's continuous disclosure system?


a. Companies with annual revenues in excess of $5 million and 300 or more shareholders.
b. Companies with annual revenues in excess of $10 million and 500 or more shareholders.
c. Companies with assets in excess of $5 million and 300 or more shareholders.
d. Companies with assets in excess of $10 million and 500 or more shareholders.

Correct Ans - d

CPA_MCQ_11

Under the Secured Transactions Article of the UCC, which of the following statements is (are) correct regarding the filing of a financing statement?

I. A financing statement must be filed before attachment of the security interest can occur.
II. Once filed, a financing statement is effective for an indefinite period of time provided continuation statements are timely filed.
a. I only.
b. II only.
c. Both I and II.
d. Neither I nor II.
Correct Ans - b

CPA_MCQ_10

Brown transfers property to a trust. A local bank was named trustee. Brown retained no powers over the trust. The trust instrument provides that current income and $6,000 of principal must be distributed annually to the beneficiary. What type of trust was created?

a. Simple.
b. Grantor.
c. Complex.
d. Revocable.

Correct Ans - C

CPA_MCQ_9

For which of the following contracts will a court generally grant the remedy of specific performance?


a. A contract for the sale of a patent.
b. A contract of employment.
c. A contract for the sale of fungible goods.
d. A contract for the sale of stock that is traded on a national stock exchange.

Correct Ans - a

CPA_MCQ_8

Grill deals in the repair and sale of new and used clocks. West brought a clock to Grill to be repaired. One of Grill's clerks mistakenly sold West's clock to Hone, another customer. Under the Sales Article of the UCC, will West win a suit against Hone for the return of the clock?


a. No, because the clerk was not aware that the clock belonged to West.
b. No, because Grill is a merchant to whom goods had been entrusted.
c. Yes, because Grill could not convey good title to the clock.
d. Yes, because the clerk was negligent in selling the clock.

Correct Ans - b

CPA_MCQ_7

According to the ethical standards of the profession, a CPA's independence would most likely be impaired if the CPA:

a. Accepted any gift from a client.
b. Became a member of a trade association that is a client.
c. Contracted with a client to supervise the client's office personnel.
d. Served, with a client bank, as a co-fiduciary of an estate or trust.

Correct Ans - C

CPA_MCQ_6

Under which of the following circumstances may a CPA charge fees that are contingent upon finding a specific result?


a. For an examination of prospective financial statements.
b. For an audit or a review if agreed upon by both the CPA and the client.
c. For a compilation if a third party will use the financial statement and disclosure is not made in the report.
d. If fixed by courts, other public authorities, or in tax matters if based on the results of judicial
proceedings.

Correct Ans - d

CPA_MCQ_5

Which of the following circumstances is a defense to an accountant's liability under Section 11 of the Securities Act of 1933 for misstatements and omissions of material facts contained in a registration statement?

a. The absence of scienter on the part of the accountant.
b. The absence of privity between purchasers and the accountant.
c. Due diligence on the part of the accountant.
d. Nonreliance by purchasers on the misstatements.

Correct Ans - C

CPA_MCQ_4

Which of the following promises is supported by legally sufficient consideration and will be enforceable?

a. A person's promise to pay a real estate agent $1,000 in return for the real estate agent's earlier act of not charging commission for selling the person's house.
b. A parent's promise to pay one child $500 because that child is not as wealthy as the child's sibling.
c. A promise to pay the police $250 to catch a thief.
d. A promise to pay a minor $500 to paint a garage.

Correct Ans - d

CPA_MCQ_3

Under the Negotiable Instruments Article of the UCC, which of the following instruments meets the negotiability requirement of being payable on demand or at a definite time?

a. A promissory note payable one year after a person's marriage.
b. A promissory note payable June 30, year 1, whose holder can extend the time of payment until the following June 30 if the holder wishes.
c. A promissory note payable June 30, year 1, whose maturity can be extended by the maker for a reasonable time.
d. An undated promissory note payable one month after date.

Correct Ans - b

CPA_MCQ_2

Thorn purchased a used entertainment system from Sound Corp. The sales contract stated that the entertainment system was being sold "as is." Under the Sales Article of the UCC, which of the following statements is (are) correct regarding the seller's warranty of title and against infringement?

I. Including the term "as is" in the sales contract is adequate communication that the seller is conveying the entertainment system without warranty of title and against infringement.
II. The seller's warranty of title and against infringement may be disclaimed at any time after the contract is formed.

a. I only.
b. II only.
c. Both I and II.
d. Neither I nor II.

Correct Ans - d

CPA_MCQ_1

Which of the following requirements must be met, by any type of deed, in order for title to real property to be transferred?

a. The deed must be delivered to the purchaser of the property.
b. The deed must be recorded by the seller of the property.
c. The deed must include a statement of the property's value.
d. The deed must include a general warranty of title.

Ans - a is correct