CGA CGA Business Law & Governance 1

Question 1

Which element is NOT required for a valid contract under US contract law?

Accepted Answer

Written documentation

Answer

Most contracts do not need to be in writing to be valid; the required elements are offer, acceptance, consideration, capacity, and legality.

Question 2

Under the Uniform Commercial Code (UCC), which type of contract primarily governs the sale of goods?

Accepted Answer

Article 2 of the UCC

Answer

UCC Article 2 governs contracts for the sale of goods (tangible, movable personal property) and provides standardized rules for commercial transactions.

Question 3

What is the primary liability characteristic of a limited liability company (LLC)?

Accepted Answer

Members' personal assets are generally protected from business liabilities

Answer

LLC members enjoy limited liability, meaning their personal assets are generally shielded from the company's debts and legal obligations.

Question 4

A corporation's board of directors owes shareholders which primary fiduciary duty?

Accepted Answer

Duty of loyalty and duty of care

Answer

Directors owe shareholders the duty of care (acting with reasonable diligence) and the duty of loyalty (putting shareholders' interests above personal interests).

Question 5

Which of the following transactions would require SEC registration under the Securities Act of 1933?

Accepted Answer

A private company's initial public offering of securities to the public

Answer

The Securities Act of 1933 requires companies to register securities offered to the general public in an IPO, ensuring investors receive material disclosures.

(CGA) Certified General Accountant Practice Test

(CGA) Certified General Accountant Practice Test

CGA CGA Business Law & Governance 1