[jeff]

Free Study Planner, Notes, Audio, Flashcards: https://www.another71.com/cpa-exam-study-plan/

Free CPA Exam Survival Guide: https://www.another71.com/cpa-exam-survival-guide/

Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[MommyBear]

2–Under the Secured Transaction Article of the U.C.C. (Article 9), which of the following purchasers will own consumer goods free of a perfected security interest in the goods?

A. A merchant who purchases the goods for resale

B. A merchant who purchases the goods for use in its business

C. A consumer who purchases the goods from a consumer purchaser who gave the security interest

D. A consumer who purchases the goods in the ordinary course of business

[Anonymous]

2-D?

[MommyBear]

That's awesome beautifulnim. It is meant to be tougher than the real thing on purpose. Good luck tomorrow! Feel free to join in the quizzing if you want some extra blaw practice.

[MommyBear]

D is correct! In most cases, a perfected security interest will prevail over the competing interests of all other parties. However, not even a perfected security interest will prevail over someone who purchases goods in the ordinary course of business (regardless of whether it is a consumer or nonconsumer purchaser). The purpose of this rule is to allow the buyer to purchase a merchant's inventory without fear that it could be repossessed by the party holding the secured interest in the inventory.

[MommyBear]

1-A

[Anonymous]

1 is B – Generally, a buyer has a right to reject goods tendered that do not conform to the contract. This rejection can be for any goods that fail in any respect (quantity, quality, color, etc.) to conform to the contract.

A buyer, however, does not have a right of rejection if the goods conform to the contract and it is immaterial whether, at the time of tender, the buyer either needs the goods or the goods do not meet the buyer's needs.

[MommyBear]

3-Under the Negotiable Instruments Article of the U.C.C., which of the following instruments is classified as a promise to pay?

A. A check

B. A draft

C. A trade acceptance

D. A certificate of deposit

[Anonymous]

3-A?

[MommyBear]

I don't understand. I know I read somewhere that if the alternate goods serve an adequate purpose they can accept delivery???

[MommyBear]

3 is D–a Certificate of Deposit

A certificate of deposit is a written acknowledgment of a bank that it has received a specified sum of money as a deposit, with a return promise to repay that money. A check is a draft drawn on a bank, payable on demand. A draft is an instrument where another party pays money to a third party. A trade acceptance is a bill of exchange between the seller and the buyer in which a payment will be made at a future date.

[Anonymous]

So, question 1- A was whether or not the buyer can deny the shipment because it doesn't meet his needs at the time. They aren't allowed to deny for that, but can deny if something is wrong with the shipment or the order isn't correct.

[MommyBear]

4-Under the Negotiable Instruments Article of the U.C.C. (Article 3), which of the following statements is (are) correct regarding the requirements for an instrument to be negotiable?

The instrument must be in writing, be signed by both the drawer and the drawee, and contain an unconditional promise or order to pay.

The instrument must state a fixed amount of money, be payable on demand or at a definite time, and be payable to order or to bearer.

1 only

2 only

both

neither

[CPAfit]

@mommy thanks for the advice. I'll hit the bed early and then come back to join you guys

[MommyBear]

Oh–I didn't read that right. So if their needs changed from the time they purchased the order to the time of delivery they can't deny based on the new needs. They can only deny if the items didn't conform to contract. Got it!!!

[Anonymous]

5–Paco Corp., a building contractor, offered to sell Preston several pieces of used construction equipment. Preston was engaged in the business of buying and selling equipment.

Paco's written offer had been prepared by a secretary who typed the total price as $10,900, rather than $109,000, which was the approximate fair market value of the equipment.

Preston, on receipt of the offer, immediately accepted it. Paco learned of the error in the offer and refused to deliver the equipment to Preston unless Preston agreed to pay $109,000.

Preston has sued Paco for breach of contract.

Which of the following statements is correct?

A. Paco will not be liable because there has been a mutual mistake of fact.

B. Paco will be able to rescind the contract because Preston should have known that the price was erroneous.

C. Preston will prevail because Paco is a merchant.

D. The contract between Paco and Preston is void because the price set forth in the offer is substantially less than the equipment's fair market value.

[Author]

Replies