CGA Business Law & Governance Flashcards
6 cards from real CGA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CGA Business Law & Governance flashcards as text
Which element is NOT required for a valid contract under US contract law?
Answer: Written documentation
Most contracts do not need to be in writing to be valid; the required elements are offer, acceptance, consideration, capacity, and legality.
Under the Uniform Commercial Code (UCC), which type of contract primarily governs the sale of goods?
Answer: Article 2 of the UCC
UCC Article 2 governs contracts for the sale of goods (tangible, movable personal property) and provides standardized rules for commercial transactions.
What is the primary liability characteristic of a limited liability company (LLC)?
Answer: Members' personal assets are generally protected from business liabilities
LLC members enjoy limited liability, meaning their personal assets are generally shielded from the company's debts and legal obligations.
A corporation's board of directors owes shareholders which primary fiduciary duty?
Answer: Duty of loyalty and duty of care
Directors owe shareholders the duty of care (acting with reasonable diligence) and the duty of loyalty (putting shareholders' interests above personal interests).
Which of the following transactions would require SEC registration under the Securities Act of 1933?
Answer: A private company's initial public offering of securities to the public
The Securities Act of 1933 requires companies to register securities offered to the general public in an IPO, ensuring investors receive material disclosures.
Under the Sarbanes-Oxley Act (SOX), which section requires management to assess and report on internal controls over financial reporting?
Answer: Section 404
SOX Section 404 requires management to include an internal control report in annual filings, and the external auditor must attest to management's assessment.