Wiley CPAexcel Exam Review 2014 Study Guide, Regulation

Appendix B: Regulation Sample Testlet Released by AICPA

1. Which of the following statements concerning the similarities between a general partnership and a corporation are correct?

a. Corporate stockholders and general partners have limited personal liability.

b. Corporations and general partnerships have perpetual existence.

c. Corporations and general partnerships can declare bankruptcy.

d. Corporations and general partnerships are recognized as taxpayers for federal income tax purposes.

1. (c) The requirement is to identify the similarity between a general partnership and a corporation. Answer (c) is correct because under the federal securities laws both a corporation and a general partnership may file for bankruptcy. Answer (a) is incorrect because general partners do not have limited liability for partnership debts. Answer (b) is incorrect because while corporations have perpetual existence, general partnerships do not. Answer (d) is incorrect because while a corporation is a taxpaying entity, a partnership is a flow-through entity. The partners of the partnership pay the taxes.

2. Furl Corp., a corporation organized under the laws of State X, sued Row, a customer residing in State Y, for nonpayment for goods sold. Row attempted to dismiss the suit brought by Furl in State Y on the grounds that Furl was conducting business in State Y but had not obtained a certificate of authority from State Y to transact business therein. Which of the following actions by Furl would generally ...