(a) Imagine that you discover a long-ignored cure for headaches in an old U.S. medical journal from the 1800s, and you apply for a patent. Explain why a patent examiner would likely reject your application. (b) Discuss the patent requirement of nonobviousness.
> In alphabetical order below are balance sheet items for Karol Company at December 31, 2017. Prepare a balance sheet following the format of Illustration 1-7 (page 13). Accounts payable…………………. $65,000 Accounts receivable…………………. 71,000 Cash…………………………………
> Holding all other factors constant, indicate whether each of the following signals generally good or bad news about a company. (a) Increase in earnings per share. (b) Increase in the current ratio. (c) Increase in the debt to assets ratio. (d) Decrease i
> Presented below are a number of transactions. Determine whether each transaction affects common stock (C), dividends (D), revenues (R), expenses (E), or does not affect stockholders’ equity (NSE). Provide titles for the revenues and expenses. (a) Costs i
> For each item below, indicate the type of business activity: operating (O), investing (I), or financing (F). (a) _____ Cash received from customers. (b) _____ Cash paid to stockholders (dividends). (c) _____ Cash received from issuing new common stock. (
> Match each of the following types of evaluation with one of the listed users of accounting information. 1. Trying to determine whether the company complied with tax laws. 2. Trying to determine whether the company can pay its obligations. 3. Trying to de
> Match each of the following forms of business organization with a set of characteristics: sole proprietorship (SP), partnership (P), corporation (C). (a) _____ Shared control, tax advantages, increased skills and resources. (b) _____ Simple to set up and
> (a) What are generally accepted accounting principles (GAAP)? (b) What body provides authoritative support for GAAP?
> Tom Dawes, the founder of Footwear Inc., needs to raise $500,000 to expand his company’s operations. He has been told that raising the money through debt will increase the riskiness of his company much more than issuing stock. He doesn’t understand why t
> Name ratios useful in assessing (a) liquidity, (b) solvency, and (c) profitability.
> (a) Geena Lowe believes that the analysis of financial statements is directed at two characteristics of a company: liquidity and profitability. Is Geena correct? Explain. (b) Are short-term creditors, long-term creditors, and stockholders primarily inter
> Identify the two parts of stockholders’ equity in a corporation and indicate the purpose of each.
> How do current liabilities differ from long-term liabilities?
> Which ratio or ratios from this chapter do you think should be of greatest interest to: (a) a pension fund considering investing in a corporation’s 20-year bonds? (b) a bank contemplating a short-term loan? (c) an investor in common stock?
> Define current assets. What basis is used for ordering individual items within the current assets section?
> The accounting equation is Assets = Liabilities + Stockholders’ Equity. Appendix A, at the end of this textbook, reproduces Apple’s financial statements. Replacing words in the equation with dollar amounts, what is Apple’s accounting equation at Septembe
> What types of information are presented in the notes to the financial statements?
> Why is it important for financial statements to receive an unqualified auditor’s opinion?
> What is the purpose of the management discussion and analysis section (MD&A)?
> What was Apple’s largest current asset, largest current liability, and largest item under “Assets” at September 27, 2014?
> Which of these items are liabilities of White Glove Cleaning Service? (a) Cash. (f) Equipment. (b) Accounts payable. (g) Salaries and wages payable. (c) Dividends. (h) Service revenue. (d) Accounts receivable. (i) Rent expense. (e) Supplies.
> (a) Define the terms assets, liabilities, and stockholders’ equity. (b) What items affect stockholders’ equity?
> What is the basic accounting equation?
> What is retained earnings? What items increase the balance in retained earnings? What items decrease the balance in retained earnings?
> “A company’s net income appears directly on the income statement and the retained earnings statement, and it is included indirectly in the company’s balance sheet.” Do you agree? Explain.
> What are the three basic forms of business organizations?
> (a) Why is it important for business persons to have an understanding of the basic principles of criminal law and white-collar crime? (b) What is the difference between felonies and misdemeanors?
> Describe three trends in criminal law that impact business organizations and businesspeople.
> Adam was hired by a defense contractor for a position that required a clearance for classified material. He failed to disclose a criminal conviction on a Department of Defense personnel security questionnaire, but admitted that he knew there was false in
> Allen, Mary, and Jon agreed to participate in a program to manipulate the values of securities. Allen made several telephone calls to securities brokers in which he delivered false information about a number of companies. Before any further actions were
> A study of one major company’s code of ethics by the Business Roundtable found that the lower the level of employees on the corporate ladder, the greater their hostility and cynicism toward codes of business ethics. (a) Why might this be true? (b) What
> Discuss why lawyers are sometimes viewed as being unethical. Is the average lawyer more or less ethical than the average business manager?
> Explain how, in our society, ethical values frequently become law and how legal regulation can promote change in ethical values. Describe several common ethical values that are found in law.
> (a) Define stare decisis. What are its advantages? Disadvantages? (b) What is the distinction between a precedent and dicta in judicial decisions, and how does this distinction relate to stare decisis? (c) Alex was on a coast-to-coast trip by automobile.
> (a) Give two additional terms for legislation. (b) Why is uniformity of law important to business? How can legislators achieve uniformity of the laws affecting business? What is the most significant uniform law affecting business? (c) For what purposes d
> (a) Who controls the closely held corporation? Explain. (b) Describe five techniques that a corporation might use to avoid the double taxation of corporate profits.
> (a) Name three kinds of deeds to land and explain what they mean. (b) Why is it important to register a deed? Discuss.
> What are the dollar amounts related to fines and what are the number of years related to prison terms for those that violate the Securities Act of 1934?
> Donna, a corporate director, sold 100 shares of stock in her corporation on June 1, 2007. The selling price was $10.50 a share. Two months later, after the corporation had announced substantial losses for the second quarter of the year, Donna purchased 1
> (a) Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 are of fundamental importance in the law of securities regulations. What is the main purpose of this section and rule? (b) Do you suppose that an oral promise made and not performed
> Describe the Sarbanes-Oxley provisions that require certification of financial statements and internal financial controls.
> Some commentators state that the concept of independence is the most important aspect of Sarbanes-Oxley. How is independence required and why is it critical to corporate governance?
> What was the primary way the Sarbanes-Oxley Act increased the authority and capabilities of the SEC?
> (a) Why is the position of general counsel of an administrative agency so important? (b) What is the purpose of the administrative law judges within administrative agencies?
> This chapter discusses five reasons for having administrative agencies. Give an example for each reason.
> (a) Real estate is no longer defined as extending from the center of the earth to the heavens. Explain how modern property law imposes more limits. (b) If David tosses a ball across Laura’s yard, but it does not touch the surface of her yard, has it infr
> (a) Name three types of security interests in land and explain them. (b) Discuss why recording mortgages and deeds of trust is so important. Why is recording less important in the case of the land sales contract?
> (a) In terms of a gift, explain delivery and constructive delivery. (b) What is a testamentary gift?
> Why is an employment contract usually viewed as being divisible while a construction contract is not considered divisible?
> (a) Why are conditions important in understanding how and when contracts are performed? (b) List the three types of conditions that are most common in contractual performance.
> Ralph is a systems analyst for the Silicon Corporation, a major defense contractor. When Ralph’s co-workers learn that he has AIDS, six of them quit work immediately. Fearing that additional resignations will delay production, the company discharges Ralp
> (a) What is the purpose of the PSLRA? (b) List four ways Congress accomplishes this purpose.
> What role do reviewing or appellate courts play in the judicial process? How do they differ from trial courts?
> Detail three trends in the law related to corporate governance. Discuss whether you believe these trends, taken together, reflect an increase or decrease in legal risk associated with managing the organization.
> Albert and Barbara wish to enter into the business of manufacturing fine furniture. Which form of business organization would you recommend in each of the following situations? Explain each of your answers. (a) Barbara is a furniture expert, but she has
> (a) How is mediation fundamentally different from an arbitration? (b) What are some of the advantages and disadvantages of the mediation process?
> What steps usually are followed to provide an effective and efficient mediation? Explain.
> (a) Explain what it means to acquire ownership by accession. (b) Discuss why to John Locke a doctrine similar to accession justifies who owns what.
> (a) What does James Madison think is the problem with a private property system, a system he nevertheless supported? (b) Suppose you say to your roommate, “I have as much property as Bill Gates,” although more accurately in terms of law you should say, “
> What is the rule against perpetuities? What does it have to do with the common good?
> Distinguish a public nuisance from a private nuisance. What does nuisance have to do with the common good? Discuss.
> Smith, a resident of Michigan, was in Florida for a business meeting where he was served with a divorce petition filed by his wife, who had moved to Florida recently. Smith objected to the Florida court’s exercise of personal jurisdiction. What is the ba
> A group of environmentalists filed a lawsuit challenging commercial fishing in Glacier Bay National Park and sued the secretary of the interior and the National Park Service in order to prevent more commercial fishing. (a) What must the environmentalists
> (a) Explain why property can be thought of as the central concept underlying Western legal systems. (b) What does James Madison mean when he says we have property in our opinions “and free communication of them”?
> (a) What is property? How does property differ from “resources”? (b) Why is property important to society? To private enterprise?
> (a) Define the rule of law. How does the rule of law differ from law as the commands of the state? (b) Explain why the rule of law is “an ideal rather than a complete fact.”
> (a) Define law. Compare and contrast law and custom. (b) What role do the courts and police play in the legal system?
> (a) What is the specific purpose of: (1) the Clayton Act, (2) the Railway Labor Act, and (3) the Norris-LaGuardia Act? (b) Why did these laws not increase laborers’ bargaining power to the degree that is considered equal to management’s bargaining powe
> (a) What are fungible goods? Give an example. (b) Discuss why boundaries of use are sometimes difficult to determine.
> Plaintiffs purchased state lottery tickets and were winners along with 76 others. The state had advertised that $1,750,000 would be the prize, but it distributed only $744,471. Plaintiff sued the lottery director, alleging fraud in the conduct of the lot
> (a) Again there are two issues that must be addressed by courts when they review the rulemaking (quasi-legislative) functions of agencies. What are these two issues? Explain each. (b) A national bank sought permission from the comptroller of the currency
> What Is a Security? W.J. Howey Company and Howey-in-the-Hills Service Inc. are Florida corporations under common control and management. Howey Company offers to sell to the public its orange grove, tree by tree. Howey-in-the-Hills Service Inc. offers th
> (a) What are the three major principles of the WTO? (b) Has adherence to those principles improved international trade? (c) Describe the organization of the EU. (d) How is it similar to the structure of the government of the United States?
> (a) Is a lease of a mowing tractor a bailment? Explain. (b) A warehouse contract requires that your equipment be stored in “warehouse 314.” For its own convenience the warehouseman moves your equipment to warehouse 212, and your equipment is destroyed by
> (a) What does it mean to have a fee simple defeasible estate? (b) What is the difference between a remainder interest and a reversion? (c) Arla and Jack own a house as joint tenants with right of survivorship. What is the legal significance of this?
> Outline criticisms of the EIS process. Why are state EISs often less helpful in evaluating complex environmental factors than are those prepared by federal agencies?
> (a) Your firm has been hired to build a large government facility near a residential neighborhood. A committee of residents has been formed to oppose the building. You have been asked to assist in writing the EIS. What factors must your EIS take into con
> (a) As a manufacturer of paints, you need to dispose of certain production by-products that are highly toxic. Discuss the process the law requires you to follow in disposing of these products. (b) An abandoned radioactive waste site is discovered by loca
> (a) What is the difference between an individual point-source approach and a bubble-policy approach to dealing with factory pollution? (b) For the factory owner, what are the advantages of employing the bubble concept?
> (a) Along a winding dirt road, Lee finds an old, rusty car with no license plates. Looking through the car, which is unlocked, he finds a valuable diamond ring. Later, the original buyer of the ring comes forward and admits that he has dumped the old car
> The Akins Corporation wishes to build a new smelting facility in Owens County, an area where air pollution exceeds primary air quality standards. (a) What legal difficulties may Akins face? (b) What solutions might you suggest for these difficulties?
> Under the Truth-in-Lending Act, what is a finance charge? What charges are and are not included as finance charges?
> What is meant by the phrase liability of a business organization as compared to the liability of the owners?
> Why does dissolution of a business organization not necessarily impact that organization’s business activities?
> (a) An employer hires job applicants to wait tables in the Executive Heights Restaurant only if they are over 6 feet tall. Does this policy likely violate Title VII? Explain. (b) If a class of job applicants under 6 feet sues the employer, will it likely
> Jennings Company, which manufactures sophisticated electronic equipment, hires its assembly employees on the basis of applicants’ scores on a standardized mathematics aptitude test. It has been shown that those who score higher on the test almost always
> Sophia’s Glam Designs needs to hire 100 new workers to manufacture a new line of back-toschool outfits. The company received hundreds of applications for the positions. Simone, Sophia’s 68 Glam Designs Human Resources Manager, requires all new hires to c
> John Hancock Life Insurance Company instructed its employees to create passwords to protect their e-mail accounts. Employees also were told to create personal folders for messages they send and receive. After a company investigation, Nancy and Joanne wer
> Why has the aging of the “baby boom” generation put so much pressure on the financial stability of historically successful companies?
> In the sixth month of her pregnancy, Suzanne was advised by her doctors to slow down the hectic pace of her consulting career. Upon this advice, Suzanne requested and was granted by her employer 12 weeks of medical leave. During the tenth week of this le
> Another article from The Wall Street Journal carries the headline “Tipsters Telephoning Ethics Hot Lines Can End Up Sabotaging Their Own Jobs.” Discuss why whistle-blowing is unpopular within the corporation. Apply to your discussion what sociologist Rob
> To show your understanding of the WARN notice, answer these questions: (a) Who are the covered employers? (b) What format is required for a WARN notice? 684 (c) When must the WARN notice be given? (d) To whom must the WARN notice be delivered?
> (a) The Sherman Act, as amended by the Clayton Act, seeks to preserve competition by declaring two types of anticompetitive behavior to be illegal. Describe these two behaviors. (b) Through what agencies does the federal government enforce the antitrust
> (a) What is the purpose of patents and copyrights as identified in the Constitution? (b) Explain the claim that the pace of research and development of new products would slow if intellectual property right did not protect it.
> Don, a promoter of prize fights, formed a corporation. Don was the sole shareholder, sole director, and president of the corporation. Don was charged with a violation of RICO. Is the requirement of both a person and an enterprise met?
> Joe, a purchasing agent of ABC Company, entered into a contract to purchase software on behalf of ABC from a software company represented by Harry. The contract stated a price of $10,000 but the actual cost was $8,000. Joe and Harry split the $2,000. Wha
> Your business is in need of additional working capital. You contact your bank about a loan. A line of credit of $500,000 is tentatively approved pending you furnish audited financial statements. You meet with your auditor who is also a personal friend. S
> (a) What federal law establishes the minimum wage and the hours in a workweek? (b) What is the minimum wage and what is considered the maximum workweek? (c) What is required regarding overtime compensation or time off?
> Quincy was a successful investment banker specializing in underwriting and merger advice. A federal grand jury was investigating the sales of initial public offerings, and Quincy knew that the grand jury had issued subpoenas seeking information about Qui
> The U.S. sentencing guidelines apply a mathematical formula to sentencing. How do the guidelines operate?
> A pharmaceutical company tried to boost its sales by encouraging doctors to use its new drug, LDL Control, to treat high cholesterol. An important part of their sales pitch included paying for lavish dinners and weekend trips for the doctors and their fa
