Hello I have been studying for the CPA for quite some time. I needs some help with these questions. I want to know if my answers are correct. Thank you
1. Which of the following gives the owners of the business limited liability?
d. None of the above (THIS IS THE ANSWER)
Answer: I think that the answer here is D ( none of the above) because the LLC is the only one that can give owners of the business limited liability.
2. Which of the following gives priority to creditors in a dissolution?
a. A proprietorship
b. An LLC
c. A partnership (THIS IS THE ANSWER)
d. all of the above
Answer: C because usually personal creditors have first priority to personal assets; any excess goes to partnership creditors.
3. Which statement is correct?
a. A foreign corporation is one organized in another country but does business in the US
b. A foreign corporation is one organized in one state but does business in another state
c. Any type of business entity doing business abroad is a foreign company
d. None of the above is correct
Answer: B or D, because a foreign corporation is one doing business in any state except the state in which is was incorporated
4. Which of the following is not a disadvantage of a corporate form of entity?
a. Double taxation
b. Incorporation costs
c. Accumulating or raising capital (THIS IS THE ANSWER)
5. Which of the following statements is not true?
a. Most states allow an easy transition from a conventional partnership into an LLP
b. Most common law and statutory law from partnership law applies to LLPs
c. LLP do not require state filings ? (THIS IS THE ANSWER)
d. All corporations are either subchapter S or C corporations
Answer: C, because articles of LLP must be file with secretary of state.
6. Which of the following is a false statement about board of directors?
a. Board members may not use corporate assets
b. Board members may not profit from the company with or without permission of the entity
c. Board members can not compete directly with the entity
d. Board members cannot be board members of a competing company (THIS IS THE ANSWER)
Answer: D, because BOD serve as a director of any competing companies
7. A company’s audit committee should have at least one member considered to be a financial expert. Which of these is not an example of a financial expert?
a. Prior experience as a controller of a large corporation
b. Previous work in a public accounting firm
c. Prior experience as an internal auditor
d. A member of a professional accounting/finance association (THIS IS THE ANSWER)
8. Which of the following is not one of the elements of COSO Internal Control Integrated Framework?
a. The audit committee of the board of directors (THIS IS THE ANSWER)
b. Risk assessment
Answer: A, is not an element of COSO
9. Which of the following is not a pass-through entity?
b. Subchapter S corporation
c. Chapter C corporation (THIS IS THE ANSWER)
d. General partnership
10. Which of the following is true and the best answer?
a. The board of directors provide advice to the entity
b. The board of directors monitors and oversees senior management
c. Maintains a level of skepticism
d. All of the following are true statements (THIS IS THE ANSWER)
Answer: D, all are correct