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Flashcards in REG Deck (260)
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In a fraud case, the CPA is generally liable to all:

reasonably foreseeable victims of the misstatement


Consideration must be:

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:

in connection with a determination of statutory interest or penalties.


Ultramares rule:

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:

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?

acceptance. Without acceptance it's still just a negotiation


to be an enforceable written contract, what must the contract include?

the quantity of goods


under UCC when does risk of loss pass to buyer?

when the goods are delivered to the carrier


what does a principal have to do to terminate residual authority of one of its agents?

notify all thee agent's known customers and publish the termination in appropriate trade journals


details of an output contract

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?

quantity. price, subject matter, time for performance can all be inferred.


who has the responsibility in a check fraud scheme

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?

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?



what are reasonable grounds to OMIT an answer on a client's tax return?

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? 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?

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?

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 ________

their heirs through the estate


is a purchase price and a description of the property required to have a valid deed?

NO- you only need a description of the property


what is an example of a defect in the marketable title to real property?

an unrecorded easement


can incidental beneficiaries sue to enforce contracts?

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?

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:

1- Look at the dates! Priorities change based on the dates


claims with a "realistic possibility" of being sustained need not be:

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?

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:

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:



if a principal is either partially disclosed or undisclosed, is an agent personally liable for contracts entered into?



Under the UCC secured transactions article, what will ALWAYS prevent a security interest from attaching?

failure of the debtor to have rights in the collateral