QUESTION: 109

A partnership agreement must be in writing if:

Any partner contributes more than $500 in capital.
The partners reside in different states.
The partnership intends to own real estate.
The partnership's purpose cannot be completed within one year of formation.

Answer(s): D

Explanation:

Choice "d" is correct. Under the statute of frauds, a partnership agreement must be in writing if by its terms the agreement cannot be completed within one year.
Choice "a" is incorrect. No such rule. Although the statute of frauds requires a contract for the sale of goods for
$500 or more to be evidenced by a writing, a writing is not required to contribute more than $500 in capital to a partnership.
Choice "b" is incorrect. No such rule, a far out distracter.
Choice "c" is incorrect. While a contract to buy or sell real estate will require a writing, a partnership agreement to own/buy real estate need not be in writing.

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QUESTION: 110

Unless prohibited by the organization documents, a stockholder in a publicly held corporation and the owner of a limited partnership interest both have the right to:

Ownership of the business' assets.
Control management of the business.
Assign their interest in the business.
An investment that has perpetual life.

Answer(s): C

Explanation:

Choice "c" is correct. Both a shareholder in a publicly held corporation and the owner of a limited partnership interest have a right to assign (sell) their interest. While a shareholder is free to assign his whole ownership interest, a limited partner's assignable interest is limited to the limited partner's interest in profits and losses. Choice "a" is incorrect. Neither the stockholder of a publicly held corporation nor the owner of a limited partnership interest (or indeed, even a general partnership interest) has an ownership interest in any item of the business' assets - the assets belong to the business and not to the owners of the business.
Choice "b" is incorrect. Stockholders and limited partners generally do not have the right to participate in the management of the business.

Choice "d" is incorrect. A limited partnership interest dissolves upon death of the limited partner and so is not a perpetual investment.

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QUESTION: 111

Price owns 2,000 shares of ABC Corp.'s $10 cumulative preferred stock. During its first year of operations, cash dividends of $5 per share were declared on the preferred stock but were never paid. In the second year, dividends on the preferred stock were neither declared nor paid. If ABC is dissolved, which of the following statements is correct?

ABC will be liable to Price as an unsecured creditor for $10,000.
ABC will be liable to Price as a secured creditor for $20,000.
Price will have priority over the claims of ABC's bond owners.
Price will have priority over the claims of ABC's unsecured judgment creditors.

Answer(s): A

Explanation:

Choice "a" is correct. After a dividend is declared but not paid on cumulative preferred stock, the unpaid dividend ranks with other "unsecured" debts.
Choice "b" is incorrect. The unpaid dividend ranks as an "unsecured" not a "secured" debt and Price has no right to a dividend for the second year because no dividend was declared that year.
Choice "c" is incorrect. As an "unsecured" creditor, Price does not have priority over the company's bondholders.
Choice "d" is incorrect. The "unsecured" creditors will share in the "unsecured" category as a whole and not with any priority within the class.

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QUESTION: 112

A stockholder's right to inspect books and records of a corporation will be properly denied if the stockholder:

Wants to use corporate stockholder records for a personal business.
Employs an agent to inspect the books and records.
Intends to commence a stockholder's derivative suit.
Is investigating management misconduct.

Answer(s): A

Explanation:

Choice "a" is correct. In general, a shareholder has a right to inspect the books and records of a corporation for purposes reasonably related to his or her status as a shareholder. This right will be properly denied where the purpose is not reasonably related to their status as a shareholder.
Choice "b" is incorrect. In general, a shareholder has a right to inspect the books and records of a corporation for purposes reasonably related to his or her status as a shareholder. A shareholder need not conduct the inspection personally; a shareholder may send an agent such as an attorney or an accountant.
Choices "c" and "d" are incorrect. In general, a shareholder has a right to inspect the books and records of a corporation for purposes reasonably related to his or her status as a shareholder. Choices "c" and "d" are purposes reasonably related to the shareholder's status as a shareholder. Thus, the stockholder would have a right to inspect for those reasons.

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Free CPA-Business Exam Braindumps (page: 28)

QUESTION: 109

Explanation:

QUESTION: 110

Explanation:

QUESTION: 111

Explanation:

QUESTION: 112

Explanation: