Regulation 6 PassMaster Questions - Becker CPA Review...

Becker CPA Review, PassMaster Questions
Lecture: Regulation 6
1
© 2009 DeVry/Becker Educational Development Corp. All rights reserved.
CPA PassMaster Questions–Regulation 6
Export Date: 10/30/08

Becker CPA Review, PassMaster Questions
Lecture: Regulation 6
2
© 2009 DeVry/Becker Educational Development Corp. All rights reserved.
Commercial Paper
CPA-01068 Type1 M/C A-D Corr Ans: A PM#1 R 6-01
1. CPA-01068 Lw R03 #11 Page 15
Under the Negotiable Instruments Article of the UCC, which of the endorser's liabilities are disclaimed by
a "without recourse" endorsement?
a. Contract liability only.
b. Warranty liability only.
c. Both contract and warranty liability.
d. Neither contract nor warranty liability.
CPA-01068 Explanation
Choice "a" is correct. Endorsing a negotiable instrument without recourse negates contract liability but
not warranty liability.
Choices "b", "c", and "d" are incorrect. Each of these choices incorrectly addresses warranty and/or
contract liability.
CPA-01074 Type1 M/C A-D Corr Ans: A PM#2 R 6-01
2. CPA-01074 Lw R03 #12 Page 8
Under the Negotiable Instruments Article of the UCC, which of the following provisions satisfies the
requirement that an instrument, to be negotiable, must be payable at a definite time?
a. The instrument is dated and payable "15 days after sight."
b. The instrument is dated and payable "in six months but the payor may extend this period indefinitely."
c. The instrument is undated and payable "30 days after date."
d. The instrument is undated and payable "when the payee dies."
CPA-01074 Explanation
Choice "a" is correct. An instrument is payable at a definite time if it can be established from the face of
the instrument when the obligation will become due. An obligation payable 15 days after sight is payable
15 days after it is presented for payment.
Choice "b" is incorrect. Although six months is a definite time, the option of the payor to extend
indefinitely the time for payment destroys negotiability.
Choice "c" is incorrect. If an instrument is not dated, we cannot know when 30 days after date is.
Therefore, this is not payable at a definite time.
Choice "d" is incorrect. Although the payee will die some day, we do not know when, so the date of
payment is not definite.
CPA-01078 Type1 M/C A-D Corr Ans: C PM#3 R 6-01
3. CPA-01078 Lw R02 #17 Page 15
Under the Negotiable Instruments Article of the UCC, an endorsement of an instrument "for deposit only"
is an example of what type of endorsement?
CPA-01078 Explanation
Choice "c" is correct. The words "for deposit only" restrict further negotiation of the instrument and so are
an example of a restrictive endorsement.