Get AICPA CPA-Business Exam Practice Questions - Real and Updated

Answer : C

Choice 'c' is correct. Under the expenditure approach, GDP is calculated as the sum of: consumption expenditures + investment expenditures + government purchases + net exports.

Choice 'a' is incorrect. See definition above.

Choice 'b' is incorrect. See definition above.

Choice 'd' is incorrect. See definition above.

Answer : A

Choice 'a' is correct. This is really an agency question on apparent authority. Apparent authority is authority that a third party reasonably believes an agent has. If the third party is aware of a restriction on the agent's authority, the third party cannot reasonably believe that the agent has the restricted authority.

Choice 'b' is incorrect. A formal resolution of the partners will not be effective to destroy authority if a third party is aware of the resolution, but not if the third party is unaware of the resolution.

Choice 'c' is incorrect. Submitting a claim to arbitration is an extraordinary act. A partner has apparent authority only to enter into transactions apparently carrying on in the usual way the business of the partnership. There is no apparent authority to enter into an extraordinary transaction.

Choice 'd' is incorrect. Apparent authority is derived from what a reasonable person believes concerning the authority of a partner based on the partnership's actions toward the third party; authority derived from the express powers and purposes contained in the partnership agreement is actual authority.

Answer : C

Choice 'c' is correct.

Rule: When the partnership agreement is silent as to how profits are to be divided, they are divided equally. Note also that when the agreement is silent, losses are treated similar to profits, there is no reverse rule that profits are treated like losses.

Choices 'a', 'b', and 'd' are incorrect, per the above rule.

Answer : D

Choice 'd' is correct. Complementary goods are ones whose demand fluctuates together. If Good A and Good B are complements, then if the demand for Good A increases, the demand for Good B will also increase, tennis rackets and tennis balls are complements.

Choice 'a' is incorrect. For substitutive goods, as the price of one of the goods increases, the other good experiences an increase in demand as it is substituted for the first good. An example of substitute goods is apple and orange juice.

Choice 'b' is incorrect. Independent goods have demand functions that are not interrelated. An example would be bread and vacuum cleaners.

Choice 'c' is incorrect. Inferior goods experience a decrease in demand when income levels rise. An example is hamburger, which experiences decrease in demand as incomes rise and buyers switch to higher priced meats.

Answer : D

Choice 'd' is correct. Under the statute of frauds, a partnership agreement must be in writing if by its terms the agreement cannot be completed within one year.

Choice 'a' is incorrect. No such rule. Although the statute of frauds requires a contract for the sale of goods for $500 or more to be evidenced by a writing, a writing is not required to contribute more than $500 in capital to a partnership.

Choice 'b' is incorrect. No such rule, a far out distracter.

Choice 'c' is incorrect. While a contract to buy or sell real estate will require a writing, a partnership agreement to own/buy real estate need not be in writing.