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REG Exam – Questions With Complete Solutions
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REG Exam – Questions With Complete SolutionsIn a fraud case, the CPA is generally liable to all: Correct Ans -
reasonably foreseeable victims of the misstatement
Consideration must be: Correct Ans - legally sufficient. This doesn't
mean fair or equal.
A CPA can charge a contingent fee when helping a client with a claim for a
refund filed solely: Correct Ans - in connection with a
determination of statutory interest or penalties.
Ultramares rule: Correct Ans - established in a 1931 case of the
same name, requires privity before an accountant is liable for negligence.
Other rules, such as the Restatement rule, allow foreseeable users who rely
on a negligently false statement to sue.
Sales contracts over $500 are governed by: Correct Ans - the
statute of frauds. The UCC governs even the sale of a gumball
What is the one term that must be set for a UCC contract to be enforceable?
Correct Ans - acceptance. Without acceptance it's still just a negotiation
to be an enforceable written contract, what must the contract include?
Correct Ans - the quantity of goods
under UCC when does risk of loss pass to buyer? Correct Ans -
when the goods are delivered to the carrier
what does a principal have to do to terminate residual authority of one of
its agents? Correct Ans - notify all thee agent's known customers
and publish the termination in appropriate trade journals
details of an output contract Correct Ans - when a customer agrees
to buy all their materials from one supplier. courts decided that parties
probably know about how much a supplier will order, so that is enough
consideration to support a contract. If a contract cant be concluded within
a year of its execution it must be supported by a signed writing under the
statute of frauds
,what can never be inferred? Correct Ans - quantity. price, subject
matter, time for performance can all be inferred.
who has the responsibility in a check fraud scheme Correct Ans -
the party in the best position to detect the loss- so usually the company the
bad checks are coming from
If someone is going to transfer a check (order paper) to you, what two
things do you need to make it valid? Correct Ans - Possession-
meaning you need to actually have the check- and the person transferring it
to you needs to have signed it.
Are punitive damages available in breaches of contract? Correct Ans -
NO
what are reasonable grounds to OMIT an answer on a client's tax return?
Correct Ans - SSTS #2 says that only if both 1) the info isn't readily
available, and 2) the answer is not significant in terms of taxable income or
loss
what is the hierarchy of paying of dividing up cash to creditors/IRS after a
bankruptcy? Correct Ans - 1.security interests are paid first2.child
support and alimony3.admin costs such as attorneys and accountants who
helped DURING the bankruptcy4. employee wages 3 MONTHS PRIOR5.
contributions to benefit plans6. claims on raising or storage of grain7.
consumer deposits8. all taxes are paid next9. unsecured creditors who filed
in a timely fashion are paid pro rata and MUST BE FULLY REPAID before
anything is paid to unsecured creditors who DID NOT file in a timely
fashion
Usually, the first security interest to have priority will be the first one
__________.But what is the exception dealing with purchase money?
Correct Ans - Perfected.A purchase money security interest in NON-
INVENTORY collateral has priority if it is perfected before the debtor takes
possession or within 20 days thereafter.
what type of standard for tax shelters has the IRS adopted? Correct Ans
- a "more likely than not" standard- meaning if the preparer thinks it is
,more likely than not that the position will be upheld- they don't need to
worry about the tax return preparer penalty
in a tenancy in common, the owners have the right to pass their interests to
________ Correct Ans - their heirs through the estate
is a purchase price and a description of the property required to have a
valid deed? Correct Ans - NO- you only need a description of the
property
what is an example of a defect in the marketable title to real property?
Correct Ans - an unrecorded easement
can incidental beneficiaries sue to enforce contracts? Correct Ans -
no- the parties to the contract don't have their benefit in mind when they
create the contract
what is required for someone to file chapter 7 bankruptcy? Correct Ans
- they must have debts- it can be any amount, as long as it is not an
"abuse of the process"
Things to remember when looking at bankruptcy distribution problems:
Correct Ans - 1- Look at the dates! Priorities change based on the dates
claims with a "realistic possibility" of being sustained need not be:
Correct Ans - disclosed. these are claims that have between a 33% and
50% chance of being sustained
can a surety compel the creditor to collect from the primary debtor or go
after the debtor's collateral? Correct Ans - no. the surety is
primarily liable upon the debtor's default, and they can't compel the
creditor to take either of these actions
2 ways intent can be established: Correct Ans - show that the
defendant acted recklessly, or that the defendant knew of the
misrepresentation
, if a person is adjudicated incompetent by a court having proper
jurisdictions- all future contracts entered into by this person are:
Correct Ans - VOID
if a principal is either partially disclosed or undisclosed, is an agent
personally liable for contracts entered into? Correct Ans - YES
Under the UCC secured transactions article, what will ALWAYS prevent a
security interest from attaching? Correct Ans - failure of the debtor
to have rights in the collateral
what entity handles ethical complaints that carry national implications
Correct Ans - the AICPA
the 1933 securities act applies to sales of securities, including stocks,
bonds and notes that are issued for periods over ___________ Correct Ans
- 9 months
what is rule 505 of Regulation D of the 1933 securities act? Correct Ans
- it allows a securities sale of up to 5mil in 12 months without
registering with the SEC. it can only sell shares to a limit of 35 non-
accredited investors but unlimited sales to accredited investors
what is rule 506 of reg D of the 1933 securities act? Correct Ans -
Rule 506 merely requires that the securities not be advertised to the
general public and not be sold to more than 35 non-accredited investors.
Any type of security may qualify for this exemption, including stocks and
debentures. There is no limit on the dollar value of the issue, so long as the
other restrictions are complied with.
if you incorporate your business and you put all assets into the corp in
exchange for stock, what % do you have to own immediately afterwards to
qualify as tax free? Correct Ans - 80%
in a non-liquidating distribution of property, how do you report the
transaction? Correct Ans - the same as if you'd sold the property at
its fair market value. If you had stock you bought for $10 per share, and you
gave it to an owner of the corp when it was worth $20 per share, you'd
report $10 of capital gains per share.
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