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Wiley CPA Examination Review Outlines And Study Guides Volume 1 - 2012-2013 39th Edition Patrick R. Delaney, O. Ray Whittington - Solutions

Owners and managers of a limited liability company(LLC) owea. A duty of due care.b. A duty of loyalty.c. Both a duty of due care and a duty of loyalty.d. None of the above.
Which of the following is not characteristic of the typical limited liability company?a. Death of a member (owner) causes it to dissolve unless the remaining members decide to continue the business.b. All members (owners) are allowed by law to participate in the management of the firm.c. The
Which of the following is true of a limited liability company under the laws of the majority of states?a. At least one of the owners must have personal liability.b. The limited liability company is a separate legal entity apart from its owners.c. Limited liability of the owners is lost if they fail
Which form(s) of a business organization can have characteristics common to both the corporation and the general partnership?Limited liability company Subchapter S corporationa. Yes Yesb. Yes Noc. No Yesd. No No
Which of the following is not true of a joint venture?a. Each joint venturer is personally liable for the debts of a joint venture.b. Each joint venturer has the right to participate in the management of the joint venture.c. The joint venturers owe each other fiduciary duties.d. Death of a joint
Riewerts, Morgar and Stonk form a limited partnership.Riewerts is the one general partner. Which of the following events will cause this limited partnership to be dissolved?I. Riewerts dies and is survived by the other two partners.II. Morgan dies leaving Riewerts and Stonk.III. Riewerts takes out
The admission of a new limited partner to a limited partnership requires approval by I. A majority of the general partners.II. All of the general partners.III. A majority of the limited partners.IV. All of the limited partners.a. I only.b. II only.c. I and III only.d. II and IV only.
The admission of a new general partner to a limited partnership requires approval by I. A majority of the general partners.II. All of the general partners.III. A majority of the limited partners.IV. All of the limited partners.a. I only.b. II only.c. I and III only.d. II and IV only.
Hart and Grant formed Hart Limited Partnership. Hart put in a capital contribution of $20,000 and became a general partner. Grant put in a capital contribution of $10,000 and became a limited partner. During the second year of operation, a third party filed a tort action against the partnership and
In a limited partnership, the limited partners’ capital contribution may be in which of the following forms?a. A promise to perform services in the future for the partnership.b. An agreement to pay cash.c. A promise to give property.d. All of the above.
Mandy is a limited partner in a limited partnership in which Strasburg and Hua are the general partners. Which of the following may Mandy do without losing limited liability protection?I. Mandy acts as an agent of the limited partnership.II. Mandy votes to remove Strasburg as a general partner.a. I
To create a limited partnership, a certificate of limited partnership must be filed with the Secretary of State. Which of the following must be included in this certificate under the Revised Uniform Limited Partnership Act?I. Names of all of the general partners.II. Names of the majority of the
Alchorn, Black, and Chan formed a limited partnership with Chan becoming the only limited partner. Capital contributions from these partners were $20,000, $40,000, and$50,000, respectively. Chan, however, helped in the management of the partnership and Ham, who had several contracts with the
Which of the following is (are) true of a limited partnership?I. Limited partnerships must have at least one general partner.II. The death of a limited partner terminates the partnership.a. I only.b. II only.c. Neither I nor II.d. Both I and II.
Sharif, Hirsch, and Wolff formed a limited partnership with Sharif and Hirsch as general partners. Wolff was the limited partner. They failed to agree upon a profit-sharing plan but put in capital contributions of $120,000, $140,000, and $150,000, respectively. At the end of the first year how
Which of the following statements is correct with respect to a limited partnership?a. A limited partner may not be an unsecured creditor of the limited partnership.b. A general partner may not also be a limited partner at the same time.c. A general partner may be a secured creditor of the limited
Dowd, Elgar, Frost, and Grant formed a general partnership.Their written partnership agreement provided that the profits would be divided so that Dowd would receive 40%; Elgar, 30%; Frost, 20%; and Grant, 10%. There was no provision for allocating losses. At the end of its first year, the
Wind, who has been a partner in the PLW general partnership for four years, decides to withdraw from the partnership despite a written partnership agreement that states, “no partner may withdraw for a period of five years.” Under the Uniform Partnership Act, what is the result of Wind’s
Under the Revised Uniform Partnership Act, in which of the following cases will property be deemed to be partnership property?I. A partner acquires property in the partnership name.II. A partner acquires title to it in his/her own name using partnership funds.III. Property owned previously by a
Which of the following statements best describes the effect of the assignment of an interest in a general partnership?a. The assignee becomes a partner.b. The assignee is responsible for a proportionate share of past and future partnership debts.c. The assignment automatically dissolves the
Which of the following actions require(s) unanimous consent of the partners under partnership law?I. Making partnership a surety.II. Admission of a new partner.a. I only.b. II only.c. Both I and II.d. Neither I nor II.
Under the Revised Uniform Partnership Act, partners have joint and several liability fora. Breaches of contract.b. Torts committed by one of the partners within the scope of the partnership.c. Both of the above.d. None of the above.
In a general partnership, which of the following acts must be approved by all the partners?a. Dissolution of the partnership.b. Admission of a partner.c. Authorization of a partnership capital expenditure.d. Hiring an employee.
The apparent authority of a partner to bind the partnership in dealing with third partiesa. Will be effectively limited by a formal resolution of the partners of which third parties are aware.b. Will be effectively limited by a formal resolution of the partners of which third parties are unaware.c.
Cobb, Inc., a partner in TLC Partnership, assigns its partnership interest to Bean, who is not made a partner.After the assignment, Bean asserts the rights to I. Participate in the management of TLC.II. Cobb’s share of TLC’s partnership profits.Bean is correct as to which of these rights?a. I
Lark, a partner in DSJ, a general partnership, wishes to withdraw from the partnership and sell Lark’s interest to Ward. All of the other partners in DSJ have agreed to admit Ward as a partner and to hold Lark harmless for the past, present, and future liabilities of DSJ. As a result of Lark’s
The partnership agreement for Owen Associates, a general partnership, provided that profits be paid to the partners in the ratio of their financial contribution to the partnership.Moore contributed $10,000, Noon contributed $30,000, and Kale contributed $50,000. For the year ended December 31,
Which of the following is not true of a general partnership?a. Ownership by the partners may be unequal.b. It is a separate legal entity.c. An important characteristic is that the partners share in the profits equally.d. Each partner has an equal right to participate in management.
Sydney, Bailey, and Calle form a partnership under the Revised Uniform Partnership Act. During the first year of operation, the partners have fundamental questions regarding the rights and obligations of the partnership as well as the individual partners. Which of the following questions can
A partnership agreement must be in writing ifa. Any partner contributes more than $500 in capital.b. The partners reside in different states.c. The partnership intends to own real estate.d. The partnership’s purpose cannot be completed within one year of formation.
A silent partner in a general partnershipa. Helps manage the partnership without letting those outside the partnership know this.b. Retains unlimited liability for the debts of the partnership.c. Both of the above are correct.d. None of the above is correct.
Which of the following can be a partnership?a. Karen and Sharon form a charitable organization in which they received donations to give to their favorite charities.b. Frank and Pablo are members of a union at work that has 150 members.c. Janice and Stanley form a club to encourage business contacts
A general partnership musta. Pay federal income tax.b. Have two or more partners.c. Have written articles of partnership.d. Provide for apportionment of liability for partnership debts.
Which of the following statements is not true of a sole proprietorship?a. Federal and state governments typically require a formal filing with the appropriate government officials whether or not the sole proprietorship uses a fictitious name.b. The sole proprietorship is not a separate legal entity
The Wall Street Reform and Consumer Protection(Dodd-Frank) Act of 2010 requiresa. All members of the compensation committee of the board of directors to be independent.b. All members of the corporate governance committee of the board of directors to be independent.c. All voting members of the board
Which of the following is not an aspect of the Wall Street Reform and Consumer Protection (Dodd-Frank) Act of 2010?a. The act increased the regulation of insurance companies.b. The act prohibits banks from engaging in proprietary trading.c. The act puts limits on the compensation of corporate chief
Under the Sarbanes-Oxley Act which of the following officers must periodically certify that reports comply fully with relevant securities laws and also fairly present the financial condition of company in all material aspects?a. The chairman of the board and the chief executive officer.b. The
Burk Corporation has issued securities that must be registered with the Securities Exchange Commission under the Securities Exchange Act of 1934. A material event took place yesterday, that is, there was a change in the control of Burk Corporation. Which of the following statements is correct?a.
Which of the following is correct concerning financial statements in annual reports (Form 10-K) and quarterly reports(Form 10-Q)?a. Both Form 10-K and Form 10-Q must be audited by independent public accountants and both must be filed with the SEC.b. Both Form 10-K and Form 10-Q must be audited by
Adler, Inc. is a reporting company under the Securities Exchange Act of 1934. The only security it has issued is voting common stock. Which of the following statements is correct?a. Because Adler is a reporting company, it is not required to file a registration statement under the Securities Act of
Which of the following events must be reported to the SEC under the reporting provisions of the Securities Exchange Act of 1934?Tender offers Insider trading Soliciting proxiesa. Yes Yes Yesb. Yes Yes Noc. Yes No Yesd. No Yes Yes
Which of the following reports must also be submitted to the SEC?Report by any party making a tender offer to purchase Link’s stock Report of proxy solicitations by Link stockholdersa. Yes Yesb. Yes Noc. No Yesd. No No
Which of the following documents must Link file with the SEC?Quarterly reports(Form 10-Q)Proxy Statementsa. Yes Yesb. Yes Noc. No Yesd. No No
Which of the following situations would require Link to be subject to the reporting provisions of the 1934 Act?Shares listed on a national securities exchange More than one class of stocka. Yes Yesb. Yes Noc. No Yesd. No No
The antifraud provisions of Rule 10b-5 of the Securities Exchange Act of 1934a. Apply only if the securities involved were registered under either the Securities Act of 1933 or the Securities Exchange Act of 1934.b. Require that the plaintiff show negligence on the part of the defendant in
The Securities Exchange Commission promulgated Rule 10b-5 from power it was given the Securities Exchange Act of 1934. Under this rule, it is unlawful for any person to use a scheme to defraud another in connection with the Purchase of any security Sale of any securitya. Yes Yesb. Yes Noc. No Yesd.
Which of the following persons is not an insider of a corporation subject to the Securities Exchange Act of 1934 registration and reporting requirements?a. An attorney for the corporation.b. An owner of 5% of the corporation’s outstanding debentures.c. A member of the board of directors.d. A
Under the Securities Act of 1933, which of the following statements is correct concerning a public issuer of securities who has made a registered offering?a. The issuer is required to distribute an annual report to its stockholders.b. The issuer is subject to the proxy rules of the SEC.c. The
The registration provisions of the Securities Exchange Act of 1934 require disclosure of all of the following information except thea. Names of owners of at least 5% of any class of nonexempt equity security.b. Bonus and profit-sharing arrangements.c. Financial structure and nature of the
Which of the following factors, by itself, requires a corporation to comply with the reporting requirements of the Securities Exchange Act of 1934?a. Six hundred employees.b. Shares listed on a national securities exchange.c. Total assets of $2 million.d. Four hundred holders of equity securities.
Integral Corp. has assets in excess of $4 million, has 350 stockholders, and has issued common and preferred stock. Integral is subject to the reporting provisions of the Securities Exchange Act of 1934. For its 2008 fiscal year, Integral filed the following with the SEC: quarterly reports, an
The Securities Exchange Commission promulgated Rule 10b-5 under Section 10(b) of the Securities Exchange Act of 1934. Which of the following is (are) purpose(s) of the Act?To rate securities so investors can choose more wisely To encourage disclosure of information relevant to investors To deter
Dean, Inc., a publicly traded corporation, paid a$10,000 bribe to a local zoning official. The bribe was recorded in Dean’s financial statements as a consulting fee.Dean’s unaudited financial statements were submitted to the SEC as part of a quarterly filing. Which of the following federal
Under Rule 504 of Regulation D of the Securities Act of 1933, which of the following is (are) required?I. No general offering or solicitation is permitted.II. The issuer must restrict the purchasers’ right to resell the securities.a. I only.b. II only.c. Both I and II.d. Neither I nor II.
Which of the following transactions will be exempt from the full registration requirements of the Securities Act of 1933?a. All intrastate offerings.b. All offerings made under Regulation A.c. Any resale of a security purchased under a Regulation D offering.d. Any stockbroker transaction.
Pix Corp. is making a $6,000,000 stock offering. Pix wants the offering exempt from registration under the Securities Act of 1933. Which of the following requirements would Pix have to comply with when selling the securities?a. No more than 35 investors.b. No more than 35 nonaccredited investors.c.
Which of the following statements concerning an initial intrastate securities offering made by an issuer residing in and doing business in that state is correct?a. The offering would be exempt from the registration requirements of the Securities Act of 1933.b. The offering would be subject to the
Under Regulation D of the Securities Act of 1933, which of the following conditions apply to private placement offerings? The securitiesa. Cannot be sold for longer than a six-month period.b. Cannot be the subject of an immediate unregistered reoffering to the public.c. Must be sold to accredited
Frey, Inc. intends to make a $2,000,000 common stock offering under Rule 505 of Regulation D of the Securities Act of 1933. Freya. May sell the stock to an unlimited number of investors.b. May make the offering through a general advertising.c. Must notify the SEC within 15 days after the first sale
Regulation D of the Securities Act of 1933a. Restricts the number of purchasers of an offering to 35.b. Permits an exempt offering to be sold to both accredited and nonaccredited investors.c. Is limited to offers and sales of common stock that do not exceed $1.5 million.d. Is exclusively available
Which of the following facts will result in an offering of securities being exempt from registration under the Securities Act of 1933?a. The securities are nonvoting preferred stock.b. The issuing corporation was closely held prior to the offering.c. The sale or offer to sell the securities is made
An offering made under the provisions of Regulation A of the Securities Act of 1933 requires that the issuera. File an offering circular with the SEC.b. Sell only to accredited investors.c. Provide investors with the prior four years’ audited financial statements.d. Provide investors with a proxy
Eldridge Corporation is seeking to offer $7,000,000 of securities under Regulation D of the Securities Act of 1933.Which of the following is (are) true if Eldridge wants an exemption from registration under the Securities Act of 1933?I. Eldridge must comply with Rule 506 of Regulation D.II. These
Pix Corp. is making a $6,000,000 stock offering. Pix wants the offering exempt from registration under the Securities Act of 1933. Which of the following provisions of the Act would Pix have to comply with for the offering to be exempt?a. Regulation A.b. Regulation D, Rule 504.c. Regulation D, Rule
Regulation D provides for important exemptions to registration of securities under the Securities Act of 1933.Which of the following would be exempt?I. Issuance of $500,000 of securities sold in a 12-month period to forty investors.II. Issuance of $2,000,000 of securities sold in a 12-month period
Issuers of securities are normally required under the Securities Act of 1933 to file a registration statement with the Securities Exchange Commission before these securities are either offered or sold to the general public. Which of the following is a reason why the SEC adopted the registration
If securities are exempt from the registration provisions of the Securities Act of 1933, any fraud committed in the course of selling such securities can be challenged by SEC Person defraudeda. Yes Yesb. Yes Noc. No Yesd. No No
Universal Corp. intends to sell its common stock to the public in an interstate offering that will be registered under the Securities Act of 1933. Under the Act,a. Universal can make offers to sell its stock before filing a registration statement, provided that it does not actually issue stock
Which of the following securities is exempt from registration under the Securities Act of 1933?a. Shares of nonvoting common stock, provided their par value is less than $1.00.b. A class of stock given in exchange for another class by the issuer to its existing stockholders without the issuer
Which of the following securities would be regulated by the provisions of the Securities Act of 1933?a. Securities issued by not-for-profit, charitable organizations.b. Securities guaranteed by domestic governmental organizations.c. Securities issued by savings and loan associations.d. Securities
Which of the following requirements must be met by an issuer of securities who wants to make an offering by using shelf registration?Original registration statement must be kept updated The offer must be a first-time issuer of securitiesa. Yes Yesb. Yes Noc. No Yesd. No No
Which of the following is not a security under the definition for the Securities Act of 1933?a. Any note.b. Bond certificate of interest.c. Debenture.d. All of the above are securities under the Act.
Which of the above notes is (are) subject to the antifraud provisions of the Securities Act of 1933?a. I only.b. II only.c. I and III only.d. I, II, and III.
Which of the above notes is (are) exempt securities and need not be registered under the Securities Act of 1933?a. I only.b. II only.c. I and III only.d. I, II, and III.
Which of the following statements concerning the prospectus required by the Securities Act of 1933 is correct?a. The prospectus is a part of the registration statement.b. The prospectus should enable the SEC to pass on the merits of the securities.c. The prospectus must be filed after an offer to
Under the Securities Act of 1933, which of the following statements most accurately reflects how securities registration affects an investor?a. The investor is provided with information on the stockholders of the offering corporation.b. The investor is provided with information on the principal
A tombstone advertisementa. May be substituted for the prospectus under certain circumstances.b. May contain an offer to sell securities.c. Notifies prospective investors that a previously offered security has been withdrawn from the market and is therefore effectively “dead.”d. Makes known the
Under the Securities Exchange Act of 1934, which of the following types of instruments is excluded from the definition of “securities”?a. Investment contracts.b. Convertible debentures.c. Nonconvertible debentures.d. Certificates of deposit.
A preliminary prospectus, permitted under SEC Regulations, is known as thea. Unaudited prospectus.b. Qualified prospectus.c. “Blue-sky” prospectus.d. “Red-herring” prospectus.
According to Circular 230, practitioners must not sign a tax return if the return takes a position that does not havea. A more-likely-than-not probability of being sustained.b. Substantial authority.c. A realistic possibility of being sustained.d. A reasonable basis.
Circular 230 defines practice before the Internal Revenue Service to includea. Preparing and filing documents with the IRS.b. Corresponding and communicating with the IRS.c. Representing a client during an examination at IRS offices.d. All of the above are considered practice before the IRS.
A practitioner is in violation of Circular 230 if the practitionera. Publishes the availability of a written schedule of fees containing hourly rates.b. Charges a contingent fee for filing an original tax return.c. Informs a client of the possible penalties that may apply to a position taken on a
Circular 230 limits practice before the Internal Revenue Service toa. Certified Public Accountants.b. Attorneys.c. Registered tax return preparers.d. All of the above may practice before the IRS.
According to Treasury Department Circular 230, a practitioner maya. Charge a contingent fee for preparing a client’s original tax return.b. Charge any amount of fixed fee for tax work.c. Retain a client’s records for nonpayment of fees.d. Charge a contingent fee for representing a client in
According to the standards of the profession, which of the following sources of information should a CPA consider before signing a client’s tax return?I. Information actually known to the CPA from the tax return of another client.II. Information provided by the client that appears to be correct
Which of the following acts by a CPA will not result in a CPA incurring an IRS penalty?a. Failing, without reasonable cause, to provide the client with a copy of an income tax return.b. Failing, without reasonable cause, to sign a client’s tax return as preparer.c. Understating a client’s tax
According to the profession’s ethical standards, a CPA preparing a client’s tax return may rely on unsupported information furnished by the client, without examining underlying information, unless the informationa. Is derived from a pass-through entity.b. Appears to be incomplete on its face.c.
According to the standards of the profession, which of the following statements is(are) correct regarding the action to be taken by a CPA who discovers an error in a client’s previously filed tax return?I. Advise the client of the error and recommend the measures to be taken.II. Withdraw from the
According to the AICPA Statement on Standards for Tax Services, which of the following statements is correct regarding the standards a CPA should follow when recommending tax return positions and preparing tax returns?a. A CPA may recommend a position that the CPA concludes is frivolous as long as
A CPA will be liable to a tax client for damages resulting from all of the following actions excepta. Failing to timely file a client’s return.b. Failing to advise a client of certain tax elections.c. Refusing to sign a client’s request for a filing extension.d. Neglecting to evaluate the
In general, if the IRS issues a 30-day letter to an individual taxpayer who wishes to dispute the assessment, the taxpayera. May, without paying any tax, immediately file a petition that would properly commence an action in Tax Court.b. May ignore the 30-day letter and wait to receive a 90-day
A CPA owes a duty toa. Provide for a successor CPA in the event death or disability prevents completion of an audit.b. Advise a client of errors contained in a previously filed tax return.c. Disclose client fraud to third parties.d. Perform an audit according to GAAP so that fraud will be uncovered.
A CPA who prepares clients’ federal income tax returns for a fee musta. File certain required notices and powers of attorney with the IRS before preparing any returns.b. Keep a completed copy of each return for a specified period of time.c. Receive client documentation supporting all travel and
Clark, a professional tax return preparer, prepared and signed a client’s 2010 federal income tax return that resulted in a $600 refund. Which one of the following statements is correct with regard to an Internal Revenue Code penalty Clark may be subject to for endorsing and cashing the
Which, if any, of the following could result in penalties against an income tax return preparer?I. Knowing or reckless disclosure or use of tax information obtained in preparing a return.II. A willful attempt to understate any client’s tax liability on a return or claim for refund.a. Neither I
A tax return preparer may disclose or use tax return information without the taxpayer’s consent toa. Facilitate a supplier’s or lender’s credit evaluation of the taxpayer.b. Accommodate the request of a financial institution that needs to determine the amount of taxpayer’s debt to it, to be
A tax return preparer is subject to a penalty for knowingly or recklessly disclosing corporate tax return information, if the disclosure is madea. To enable a third party to solicit business from the taxpayer.b. To enable the tax processor to electronically compute the taxpayer’s liability.c. For
A penalty for understated corporate tax liability can be imposed on a tax preparer who fails toa. Audit the corporate records.b. Examine business operations.c. Copy all underlying documents.d. Make reasonable inquiries when taxpayer information appears incorrect.
Kopel was engaged to prepare Raff’s 2009 federal income tax return. During the tax preparation interview, Raff told Kopel that he paid $3,000 in property taxes in 2009.Actually, Raff’s property taxes amounted to only $600.Based on Raff’s word, Kopel deducted the $3,000 on Raff’s return,
To avoid tax return preparer penalties for a return’s understated tax liability due to an intentional disregard of the regulations, which of the following actions must a tax preparer take?a. Audit the taxpayer’s corresponding business operations.b. Review the accuracy of the taxpayer’s books

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