Business Law for Accountants - D216 Western Governors University WGU (read description)

Scienter

A person has knowledge of wrongdoing and intent of wrongdoing

Sox act of 2002

created the public company accounting oversight board, It states high level managers (CFO, CEO, Senior roles) must maintain an effective system of internal controls. Internal controls get checked by senior management annually

Outside Directors

oversee the accounting process and financial reports of a public company and review it with the audit committee

Common law

a body of law established by court decisions

Federal Trade commission (FTC)

goal is to prevent unfair trade practices ex. bait and switch, puffery, half truths

Lanham Act

protects trademarks, and false advertising claims. one must show injury to reputation, direct causation by false advertising, loss of business by those deceived

Telemarketing and consuming fraud and abuse prevention act

telemarketer must identify the sellers name, describe the product, disclose all material facts including total cost, must remove customers name from list if requested. (a salesmans name is not the seller, must be a brand or business or true seller)

Fair and accurate credit transaction act

One free credit report per year

Securities exchange act of 1933

companies must register with SEC if they are public, must complete prospectus

Securities exchange act of 1934

public companies must give continuous disclosure (form-10Q, form-10k) to prevent fraud and insider trading (10-b)

Employer / (principal)

This person gives the employee / (agent) the right to handle working with 3rd parties (is a agency relationship)

Employer / independent contractor relationship

relationship where principal cant control the actions of the agent (not an agency relationship because of lack of principal control)

Doctrine of responeat superior

agent liable for own negligence, principal liable for agent if harm to third party happened while agent was working on principals behalf

Compensate

(principal duties to agent set) duty of paying agent for services

Reimbursement

(principal duties to agent set) paying agent back for expenses

Indemnification

(principal duties to agent set) principal pays agent back if agent gets sued while in principals service

Cooperation

(principal duties to agent set) do nothing to prevent agent performance

Sole Proprietorship

(business forms and member duties set) business form where the owner is the business, Taxes are on personal income tax, Owner has unlimited personal liability for all obligations of the business with no asset protection

Safe working conditions

(principal duties to agent set) a worthy environment for agents put in place by principal

General partnership

(Business forms and member duties set) Business form where two or more people carry on a business for profit, Joint liability is in place which means personal liability is in place and split among partners, In certain situations one partner can be fully liable for everything (several liability)

C Corporation

(Business forms and member duties set) Business form where its registered and reconized with state and stater law, recognized as its own "person" meaning it has freedoms and takes on liability which protects members, It gets double taxed, members all get one equal vote

Fiduciary duty

(business forms and member duties set) partners and owners owe this responsibility to other members and owners

Duty of care

(business forms and member duties set) This fiduciary duty covers that members must refrain from grossly negligent or reckless conduct, intentional misconduct, or violations of the law (simple or unintentional negligence does not apply)

Duty of loyalty

(business forms and member duties set) This fiduciary duty covers that members must not commit to self dealing, and must work for the benefit partners and not themselves or other 3rd parties

Dissociation

To leave a partnership or LLC ultimately relieving yourself from fiduciary duty

Invested capital

What is voting power based on in a LLC?

LLC / limited liability company

(Business forms and member duties set) This business form can choose to be taxed as a C Corporation or like a S corporation (a pass through tax structure), Members can only be liable and lose up to the amount that they invest and contribute to the company

Piercing the veil

Term for being held responsible for fraud or other crimes regardless if a business structure is meant to protect you or your liability

Chapter 11 bankruptcy

(bankruptcy set) type of bankruptcy that is a business reorganizing plan to pay back creditors, this type keeps business operations going, Debtor works with creditor committee to reorganize unless its a smaller business (less than 2.7 million in debt and no owned real estate or managed real estate), 2/3 of creditors have to approve the repayment plan

Cramdown provision

(bankruptcy set) Regarding bankruptcy with a repayment plan typically 2/3 of creditors need to agree on the plan however, this term refers to when the plan is approved by a single creditor and a court once the plan is deemed "fair and reasonable"

Chapter 7 voluntary bankruptcy

(bankruptcy set) These entities can NOT apply for what kind of Bankruptcy? banks, savings and loans, insurance companies, and railroads

Family farmers & charities

(bankruptcy set) These entities can NOT be forced into involuntary bankruptcy (two of them)

3 unsecured lenders for 12 or more total lenders and 1 unsecured lender for less than 12 total lenders

(bankruptcy set) How many unsecured lenders are required to force a person or entity into bankruptcy if they have more than 12 total lenders? and how many unsecured lenders are required if less than 12 secured lenders?

Automatic stay

(bankruptcy set) This goes into place after filing and completing the "means test" and submitting your schedules, This stops creditors from performing actions to collect money

Surety and Guaranty

(co signer rights and duty set) What are the two types of Co-signers?

Surety

(co signer rights and duty set) This co signer is primarily liable and they hold a promise to be responsible for the also primary liable debtors obligation, The creditor can choose who to collect payment from of either of the primary liable signers

Guaranty

(co signer rights and duty set) This co signer is secondarily liable and only required to pay if the principal debtor defaults

Right of subrogation

(co signer rights and duty set) Right that states The co signer becomes the creditor to the principal debtor because they pay off the debt from the original creditor and now should be paid back

Right of reimbursement

(co signer rights and duty set) Right that states the co signer can ask for repayment if they pay off debt for debtor

Right of contribution

(co signer rights and duty set) Right that states if there's more than one co signer they all need to pitch in on the payments and do their fair share if principal debtor defaults

True

(co signer rights and duty set) All Co signs need to be in writing, True or False?

Material Modification

(co signer rights and duty set) This right refers to when a Co signer is released and no longer responsible for principal debtors debt if there is a change in terms of contract without any co signees consent

Payment of debt

(co signer rights and duty set) Right of co signers to be released from debt if they offer to pay off the debt and the debtor rejects

Mechanics lien

(Liens set) The lien that states if you make improvements to real property (real estate) or buildings attached to property the state law allows you to put a lien on the title of the property and push the option of foreclosure

Artesian lien

(liens set) The lien that states if you make improvements to personal property (moveable items, NOT land or buildings) you can keep the personal property if not paid, Property must remain in your possession to have lien and can be sold with notice

Judgement lien

(lien set) This lien is when a party can take another party to court if they are unpaid to get a judgement, If found that party owes you money you can push further to garnish wages or other methods of getting paid

Writ of attachment

(lien set) If a court judgement is happening soon to see if a party owes another party money, the creditor can request the court hold some of the debtors assets so they cant liquidate them before the judgement in court, This process is called what?

Writ of execution

(lien set) This term refers to a post court judgement process that allows the court to send the local sheriff to a debtors home to seize non exempt assets for the court to sell and auction off to satisfy the lender (debtors property must be in the same geographical location as courts jurisdiction)

Expressed warranty

(warranty set) This warranty is when a seller tells a buyer a promise about the product making a statement about the condition or quality of the product

Warranty Disclaimer

(warranty set) This term refers to when a seller says the product is "as is" and clearly states there is no warranties (UCC code demands transparency)

Implied warranties

(warranty set) This warranty term is one that is basically common sense, ex. You buy a toaster and you would expect the toaster to toast bread, if it doesn't do that simple task then likely it is defective and can be remedied, when buying a item it is assumed the product does what it says it does

Statute of limitations

(contracts set) This term refers to when a breach of contract accrues but there is only a certain amount of time to fight it in the courts, if to much time has passed the contract is dismissed in the courts eyes

Impossibility of performance

(contracts set) This term refers to when a contract is discharged because it is literally not possible to complete

False, A seller has the right to cancel a delivery of a product even if in transit if they learn a buyer is insolvent (insolvent meaning not able to pay)

(contracts set) A seller can NOT cancel a order or delivery once a buyer has placed the order under any circumstances, True or False?

Perfect tender rule

(contracts set) This term refers to the basic duty the seller has, to give the buyer whatever it is they paid for and the goods must conform (match) what the buyer bought, otherwise the buyer can then accept the wrong goods, reject the wrong goods, or keep some and reject some

one person

(contract set) how many people are involved in a unilateral contract?

Two or more

(contract set) how many people are involved in a bilateral contract?

Consequential or special damages

(contracts set) Term that refers to damage done that leaves affected party with no option but to take a loss as a result of the other parties breach

Compensatory damages

(contracts set) This term refers to damage done and a party attempting to make it right by putting the damaged party in the position as if the breach did not occur through monetary payments or free services

Duty to mitigate

(contracts set) This duty means to do as much as possible to prevent losses to your company or person even if you know another party will ultimately pay for it because its their fault

True

(contracts set) To mitigate means to prevent losses caused by other parties breach and to cover means to pay someone for your breaches damage, True or False?

Nominal contract breach

(contracts set) This type of contract breach simply shows which party was in the wrong and breached, nothing more or less and no damages are paid

Liquidated contract breach

(contracts set) This type of contract breach is when a contract specifies "if a contract breach occurs, breacher pays $ amount"

Statute of frauds

(contracts set) This UCC term states that any purchase over $500 needs to bein writing (can be in text or email)

Doctrine of substantial performance

(contracts set) Term that expresses if a job is for the most part completed it can reasonable be considered completed, any defects or lack of completion can be remedied by monetization

Mutual Rescission

(contracts set) Discharge that takes place if both parties agree they don't want the contract

Discharge by Novation

(contracts set) Discharge that takes place when both parties agree to swap one party out with another new party, the old party has now been novacated

Discharge by accord and satisfaction

Discharge that takes place when a new contract has been completed and finished

Chapter 13 (In real life its voluntary chapter 7 but for this class at WGU they want chapter 13 as the answer)

(bankruptcy set) What bankruptcy is the cheapest and easiest to perform?

Creditors and Investors

Who gets paid first if a LLC is going out of business and gets liquidated?

Reasonable notice of termination

(agency relationship set) For a principal to terminate a agency relationship the principal must give what to the agent?

Telephone consumer protection act

What Act prohibits solicitation over the phone with an automatic telephone dialing system or prerecorded voice?

The PCAOB (Public company accounting oversight board)

In 2002 the Sarbanes Oxley Act (SOX) created this board to oversee public accounting firms and hold CFO's and CEO's personally responsible for the accuracy of financial statements with the SEC requirements as well as requiring independent auditors to review managements assessments

Board of directors

Group of people elected by shareholders to oversee the officers of a company and make sure business is operating correctly

False, Principal is liable if agent has authority to enter into legal contracts

(agency relationship set) Principal is not liable if a agent enters into a legal binding contract with the principals authority, True or False

Revocation

(agency relationship set) an agency is terminated by the principal, what is this termination called?

Renunciation

(agency relationship set) An agency is terminated by the agent, what is the termination called?

operation of law

(agency relationship set) An agency terminated by Death, insanity, bankruptcy, or war

Common law doctrines

This primary source of law derives from court decisions and judicial opinions

Gratuitous Agency

In this relationship the agent is not liable for anything or obligated to work but is held responsible for negligence

Loyalty

(agency relationship set) An agent owes a principal this duty, It promises that any info gained in relations is confidential, as well as that the agent must act solely for the purpose of benefitting the principal

Obedience

(agency relationship set) This agent duty to the principal states agent must follow all laws and clearly stated instructions from the principal

Accounting

(agency relationship set) This agent duty states the agent must keep and make available a count of all property and funds received and paid out on the principals behalf

S Corporation

(business forms and member duties set) This type of corporation is a closed corporation (max of 100 shareholders) and has a "pass through" tax structure

Work for Hire

This term refers to the fact that any copyrighted work created by an employee while working for an employer means that the copyrighted work is owned by the employer

Ratification

(agency relationship set) this term defines when an agent does something in the name of the principal without asking first and later the principal can approve or disapprove the action

Estoppel

(agency relationship set) This term defines when a principals actions or lack there of lead a 3rd party to believe another person is a principals agent when they are not

operation of law

(agency relationship set) This term defines when a agent acts on emergency or necessity on principals behalf without asking

LLC operating agreements

This agreement includes how profits are divided, How managers are chosen, how voting rights will be apportioned in LLC's (usually based on how much capital is invested per member)

C corporations

(Business forms and member duties) This business type is a legal entity created and recognized under state law and has one or more owners known as "shareholders", It is NOT a "pass through" tax structure

Domestic

(Business forms and member duties) This type of corporation is incorporated in its home state

Foreign

(Business forms and member duties) This type of corporation is formed in another state but is currently doing business in another state and must obtain the certificate of authority

Alien

(Business forms and member duties) This type of corporation is formed in another country but doing business in the US

Public corporation

(Business forms and member duties) This type of corporation is formed by the US government ex. US postal service

Private corporation

(Business forms and member duties) This type of corporation is created for the purpose of making a profit, to go further there is two kinds of this corporation, a publicly held corp which is publicly trades on the stock market and then there is the Closed corps which are owned by a few shareholders and not open to the public to own

Member managed LLC

(Business forms and member duties) This kind of LLC has all members participate in management and decisions

Manager managed LLC

(Business forms and member duties) This kind of LLC has members create a group or put a person in charge

Equal right in management

This right of partners covers that each partner has a say and one equal vote in a partnership

Equal right to books

This right that is gifted to partners claims that a partner can at anytime inspect the documents of a company they are a partner in

Chapter 13 bankruptcy

(bankruptcy set) This form of bankruptcy is organized as more of a payment plan to the courts, the courts then pay the creditors. The plan usually runs about 3-5 yrs and is typically for a regular individual with regular income