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LA245 Final Exam Review Questions And Answers
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LA245 Final Exam Review Questions And AnswersYou are studying to become an accountant. During your school breaks, you work
part-time for a large company that sells its stock on the stock exchange. To supplement
your learning about the mechanics of investments, you buy 100 shares of stock in this
company.
You're doing the bookkeeping, and you suddenly realize that the company has just had a
really terrible financial quarter. You also realize the price for the company stock will
drop substantially once that information is made public. You decide to sell your shares
to avoid a big loss. You call your stockbroker and instruct him to sell your stocks before
this news gets out.
Have you committed any securities law violation by selling your stock when you did?
A. No, you may use all information you have when you make a decision to sell or buy
stock
B. No, a shareholder may sell or buy stock at anytime he desires to do so
C. Yes, you will be held liable under the misappropriat - Answer C. Yes, you will be held
liable under the misappropriation theory of insider trading
You have a brilliant idea for a new business. You plan to provide a traveling children's
show, complete with a traveling petting zoo and clowns for children's birthday parties,
going where the party is. You get two friends to agree to help you with your venture, so
you decide that you probably want to incorporate, just so that you appear "official."
Do you think that there is any possible downside to incorporating?
A. Yes, you can be held liable for any wrong acts your friends commit
B. Yes, you may have to pay more taxes
C. No, there are no disadvantages to incorporation
, D. While there may be some disadvantages of incorporation, you are more concerned
about the tax benefits that you will accrue from incorporation - Answer B. Yes, you may
have to pay more taxes
You are thinking of buying a restaurant with some of your friends from college. One of
the first things you will have to decide is what form of business organization you want to
create. You want to make sure liability extends only to what you do, and not what any of
your friends do. At the same time, you want to get the best tax deal possible.
Do you think that it is possible to organize your business so that you won't be held liable
for the actions and debts of your buddies, without running the risk of having to pay more
taxes?
A. Yes, you can organize your business as a sole proprietorship
B. Yes, you can organize your business as a corporation
C. Yes, you can organize your business as a partnership
D. Yes, you could organize your business as a limited liability company Answer D Yes,
you could organize your business as a limited liability company
Over the last eighteen months, you have been working on a how-to book for
entrepreneurs desiring to start their own business. You are getting toward the end of
editing the book and have started considering how you can protect the book and also
how you can ensure that you are the only one who profits from your work.
Based on these facts, what do you think you will need to do in order to ensure you are
the only one able to profit from your work?
A. You can apply for a trademark to protect your work
B. You can apply for a patent to protect your work
C. You can register a copyright with the United States Copyright Office
D. Nothing; copyright protection happens automatically once the work is in tangible
form - Answer D. Nothing; copyright protection happens automatically once the work is
in tangible form
For how long will protection for your book (intellectual property) last?
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