Regulation 6 PassMaster Questions

BeckerCPAReview,PassMasterQuestionsLecture:Regulation61©2009DeVry/BeckerEducationalDevelopmentCorp.Allrightsreserved.CPAPassMasterQuestions–Regulation6ExportDate:10/30/08BeckerCPAReview,PassMasterQuestionsLecture:Regulation62©2009DeVry/BeckerEducationalDevelopmentCorp.Allrightsreserved.CommercialPaperCPA-01068Type1M/CA-DCorrAns:APM#1R6-011.CPA-01068LwR03#11Page15UndertheNegotiableInstrumentsArticleoftheUCC,whichoftheendorser'sliabilitiesaredisclaimedbyawithoutrecourseendorsement?a.Contractliabilityonly.b.Warrantyliabilityonly.c.Bothcontractandwarrantyliability.d.Neithercontractnorwarrantyliability.CPA-01068ExplanationChoiceaiscorrect.Endorsinganegotiableinstrumentwithoutrecoursenegatescontractliabilitybutnotwarrantyliability.Choicesb,c,anddareincorrect.Eachofthesechoicesincorrectlyaddresseswarrantyand/orcontractliability.CPA-01074Type1M/CA-DCorrAns:APM#2R6-012.CPA-01074LwR03#12Page8UndertheNegotiableInstrumentsArticleoftheUCC,whichofthefollowingprovisionssatisfiestherequirementthataninstrument,tobenegotiable,mustbepayableatadefinitetime?a.Theinstrumentisdatedandpayable15daysaftersight.b.Theinstrumentisdatedandpayableinsixmonthsbutthepayormayextendthisperiodindefinitely.c.Theinstrumentisundatedandpayable30daysafterdate.d.Theinstrumentisundatedandpayablewhenthepayeedies.CPA-01074ExplanationChoiceaiscorrect.Aninstrumentispayableatadefinitetimeifitcanbeestablishedfromthefaceoftheinstrumentwhentheobligationwillbecomedue.Anobligationpayable15daysaftersightispayable15daysafteritispresentedforpayment.Choicebisincorrect.Althoughsixmonthsisadefinitetime,theoptionofthepayortoextendindefinitelythetimeforpaymentdestroysnegotiability.Choicecisincorrect.Ifaninstrumentisnotdated,wecannotknowwhen30daysafterdateis.Therefore,thisisnotpayableatadefinitetime.Choicedisincorrect.Althoughthepayeewilldiesomeday,wedonotknowwhen,sothedateofpaymentisnotdefinite.CPA-01078Type1M/CA-DCorrAns:CPM#3R6-013.CPA-01078LwR02#17Page15UndertheNegotiableInstrumentsArticleoftheUCC,anendorsementofaninstrumentfordepositonlyisanexampleofwhattypeofendorsement?a.Blank.b.Qualified.c.Restrictive.d.Special.CPA-01078ExplanationChoiceciscorrect.Thewordsfordepositonlyrestrictfurthernegotiationoftheinstrumentandsoareanexampleofarestrictiveendorsement.BeckerCPAReview,PassMasterQuestionsLecture:Regulation63©2009DeVry/BeckerEducationalDevelopmentCorp.Allrightsreserved.Choiceaisincorrect.Ablankendorsementisasignaturealonewithoutadditionalwords.Choicebisincorrect.Aqualifiedendorsementisonethatincludesthewordswithoutrecourseandsoeliminatestheendorser'scontractliabilityontheinstrument.Choicedisincorrect.Aspecialendorsementisonethatnamesanewpayee.CPA-01083Type1M/CA-DCorrAns:CPM#5R6-014.CPA-01083LwR99#14Page3WhichofthefollowinginstrumentsissubjecttotheprovisionsoftheNegotiableInstrumentsArticleoftheUCC?a.Abilloflading.b.Awarehousereceipt.c.Acertificateofdeposit.d.Aninvestmentsecurity.CPA-01083ExplanationChoiceciscorrect.Checks,drafts,promissorynotesandcertificatesofdepositsarewithintheprovisionsoftheNegotiableInstrumentsArticleoftheUCC(Article3).Choiceaisincorrect.AbillofladingisgovernedbyArticle7.Choicebisincorrect.AwarehousereceiptisgovernedbyArticle7.Choicedisincorrect.Investmentsecurities(e.g.,stocksandbonds)aregovernedbyArticle8.CPA-01086Type1M/CA-DCorrAns:APM#6R6-015.CPA-01086LwR96#8Page4UndertheNegotiableInstrumentsArticleoftheUCC,whenaninstrumentisendorsedPaytoJohnDoeandsignedFayeSmith,whichofthefollowingstatementsis(are)correct?PaymentoftheTheinstrumentcaninstrumentisbefurtherguaranteednegotiateda.YesYesb.YesNoc.NoYesd.NoNoCPA-01086ExplanationChoiceaiscorrect.Thefirstassertionistrue-paymentisguaranteed.Theinstrumenthereisendorsed.Inessence,anendorsermakesacontractofguarantee:iftheinstrumentispresentedforpaymentandisdishonored,theendorseragreestopayontheinstrumentaccordingtoitstermswhenitwasendorsed.Thesecondassertionisalsotrue.Whenaninstrumentisendorsedtoaspecifiedperson,itbecomesorderpaper,butitstillmaybenegotiatedfurther,aslongasthespecialpayeeendorses.Note:Actually,whetherornottheinstrumentmaybefurthernegotiatedalsodependsontowhomtheinstrumentwasdrawninthefirstplace,andthatinformationisnotprovided.IftheinstrumentherewaspayabletobearerortotheorderofFayeSmith,itmaybefurthernegotiated,butifitwaspayabletotheorderofanyoneelse,itcouldnotbefurthernegotiatedwithoutthatperson'sendorsement.CPA-01100Type1M/CA-DCorrAns:APM#9R6-016.CPA-01100LwMay95#43Page5UndertheCommercialPaperArticleoftheUCC,foraninstrumenttobenegotiableitmust:a.Bepayabletoorderortobearer.BeckerCPAReview,PassMasterQuestionsLecture:Regulation64©2009DeVry/BeckerEducationalDevelopmentCorp.Allrightsreserved.b.Besignedbythepayee.c.Containreferencestoallagreementsbetweentheparties.d.Containnecessaryconditionsofpayment.CPA-01100ExplanationChoiceaiscorrect.Anywritingtobeanegotiableinstrumentmustbepayabletoorderortobearer.Iftheinstrumentispayabletoorder,itisnegotiatedbydeliverywithanynecessaryendorsement;ifpayabletobeareritisnegotiatedbydelivery.UCC3-104Choicebisincorrect.Whetheraninstrumentisnegotiableisdeter