D216 Business Law for Accountants - Set 5 - Part 1

Test your knowledge of technical writing concepts with these practice questions. Each question includes detailed explanations to help you understand the correct answers.

Question 1: What is the purpose of a buy-sell agreement in a partnership?

To set the price of goods

To agree on profit distribution

To outline the process for buying out partners

To terminate the partnership

Question 2: What does commingled mean in a legal sense?

Funds mixed together with clear distinction

Funds or goods mixed together so they no longer have separate identities

Separation of funds for accounting purposes

Classification of assets for taxation

Question 3: What is the primary purpose of a condition precedent in a contract?

To end a contract

To suspend a contract

To trigger performance of a contract

To transfer liability

Question 4: What does common stock represent in a corporation?

A security representing debt

Ownership in a corporation

A type of loan

A promissory note

Question 5: What are consequential damages?

Direct compensation for losses

Punitive damages meant to punish

Damages for foreseeable, indirect losses

Compensation for emotional distress

Question 6: What is a consumer-debtor?

A person who lends goods for business purposes

One whose debts result primarily from business investments

One whose debts result from purchases for personal, family, or household use

A debtor who has committed bankruptcy fraud

Question 7: What is the purpose of a corporation?

To protect individual investors from personal liability

To provide loans to small businesses

To distribute personal loans

To handle bankruptcy proceedings

Question 8: What is the difference between a general partner and a limited partner?

General partners have limited liability, while limited partners have unlimited liability

General partners manage the business, while limited partners do not participate in management

Limited partners take on management roles, while general partners are silent

General partners invest capital, while limited partners handle day-to-day operations

Question 9: What does discharge in bankruptcy mean?

Cancellation of bankruptcy proceedings

Release of the debtor from all debts except those specifically exempt

Payment of all debts in full

Exemption of secured debts from the proceedings

Question 10: What is the purpose of dissociation in a partnership?

To allow new members to join the partnership

To dissolve the partnership

To end the relationship between a partner and the partnership

To merge the partnership with another entity

Question 11: What is dissolution in the context of a business entity?

The selling of all company assets

The process of distributing profits

The formal disbanding of a business entity

The election of new shareholders

Question 12: What are dividends in the context of a corporation?

A corporation’s profits distributed to its shareholders

The wages paid to employees

The financial losses incurred by the corporation

Payments made to bondholders

Question 13: What is the purpose of a down payment in a real estate transaction?

To reduce the mortgage interest rate

To finalize the sale of property

To reduce the amount of the loan

To pay for legal fees

Question 14: What is duress in contract law?

An agreement formed under mutual consent

A contract enforced by the threat of legal action

Unlawful pressure causing someone to act against their will

A contract formed without any written agreement

Question 15: What does an express warranty guarantee?

The product will be delivered on time

The buyer can return the product without a reason

The product will perform as advertised or promised

The seller offers lifetime support for the product

Question 16: What does foreclosure involve?

The borrower buying back a repossessed property

The lender taking possession of and selling a mortgaged property

The lender forgiving a mortgage debt

The borrower renegotiating loan terms

Question 17: What defines a foreign corporation?

A corporation formed in one state and doing business in another

A corporation with international operations

A corporation that has no registered shareholders

A company that is exempt from U.S. taxation

Question 18: What does frustration of purpose mean in contract law?

When a contract is void due to a breach

When unforeseen events destroy the purpose of a contract

When a contract’s terms are renegotiated

When the contract is terminated by mutual consent

Question 19: What is garnishment in the context of debt collection?

The seizing of property by the debtor

A court order allowing creditors to take money directly from wages

A process to file bankruptcy

A loan extension

Question 20: Who is a general partner in a limited partnership?

A partner who provides only capital and has limited liability

A partner who manages the business and assumes full liability

A partner who receives dividends from the business

A silent partner with no management role

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