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76 Cards in this Set
- Front
- Back
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Due Diligence |
-a required standard of care that accountants must meet to avoid liability for securities violations -Must follow GAAP/GAAS -use reasonable investigation -believed that statements were true/complete |
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Generally Accepted Accounting Principles (GAAP) |
conventions, rules, and procedures that define the accepted accounting principles at a particular time - Source = FASB |
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Working Papers |
various documents used/developed by accountants during an audit |
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What are the four elements of negligence? |
1. Duty 2. Breach 3. Causation 4. Damages |
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What are the 2 types of causation and the 2 tests associated with them? |
1. Actual Cause - is there a connection between breach and injury? "but for" test 2. Proximate Cause - how strong is the connection between breach and injury "foreseeability" test |
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What is the Duty of Care applied to professionals? |
professionals must exercise the established standards of care, knowledge and judgment generally accepted by members of their professional group |
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Compare and Contrast the Ultramares Rule and the Restatement Rule. |
Ultramares: if there is no existing relationship, privity, with the accountant, a party can not recover from said accountant Restatement: accountants are subject to liability for negligence not only to their clients, but also to known users of their reports |
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What is the difference between SA'33 Section 11 and 12(2)? |
Section 11: imposes civil liability on accountants for misstatements and omissions; due diligence is created (reasonable investigation) Section 12(2): imposes civil liability on accountants for fraud; liability based on communication to an investor of an untrue statement/omission of material fact |
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Abandoned Property |
property with which the owner has voluntarily parted, with no intention of recovering it |
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Accession
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occurs when an individual adds value to personal property by either labor or materials; person may acquire ownership rights in another's property through accession |
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Bailment |
situation in which the personal property of one person (bailor) is entrusted to another (bailee), who is obligated to return bailed property to the bailer or dispose of it as directed |
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Confusion |
mixing together goods that belong to two or more owners without being able to separate them again (grain) |
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Fixture |
something that was one personal property, but has now become attached to the real property so that it becomes a part of it |
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Lost Property |
property in which the owner has involuntarily parted and then cannot find/recover |
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Mislaid Property |
property in which the owner has voluntarily parted and then cannot find/recover ---leave bike at the curb with garbage and someone takes it |
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Trade Fixture |
personal property of a commercial tenant that has been installed or affixed to real property for a business purpose (tenant can remove, but must pay for damage caused to real property) |
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What is the difference between a fixture, trade fixture and personal property? |
personal property is anything kept on the premises that can be moved. a fixture is something that has been attached to the real property. and a trade fixture is one attached by a commercial tenant for business purposes |
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What are the three requirements for a gift? |
-Donation intent on part of the Donor -Delivery -Acceptance by the Donee |
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What are the Elements of a Bailment? |
-Personal Property -Delivery of possession (without title) -Agreement that property will be returned or otherwise disposed of according to owners directions |
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What is the difference between physical and constructive delivery? |
Physical delivery involve delivery the exact item that has been purchased, while constructive delivery means delivering a symbolic item, such as the car keys, rather than the car itself |
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How does liability change for the Bailee depending on the type of bailment? What duty owed to Bailor? |
·BenefitBailor: bailee only liable for gross negligence (store my car while I’m onvacation) ·Benefitof Bailee: liable for all negligence (can I borrow your car) ·MutualBenefit: bailee must exhibit regular care-ordinary negligence -Duties of bailor: compensate bailee and provide property free of defects |
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What is the liability for Common Carriers? |
the common carrier is held to astandard of care based on strict liability, rather than reasonable care, inprotecting the bailed personal property – absolutely liable regardless of duecare (except natural disaster) |
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Concurrent Ownership |
joint ownership (tenants) |
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Deed |
a document by which a title to real property is passed |
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Easement |
a non-possessory right to use another's property in a manner established by either express or implied agreement |
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Eminent Domain |
the power of a government to take land for public use from private citizens for just compensation |
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Fee Simple Absolute |
ownership interest in land, in which the owner has the greatest possible aggregation of rights, privileges and power. -owner can use, possess or dispose of property |
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Grant Deed |
deed that simply recites words of consideration and conveyance. -may impliedly warrant that at least the grantor has not conveyed the property's title to someone else |
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Joint Tenancy |
the joint ownership of property by two or more co-owners in which each one owns an undivided portion of the property. |
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Leasehold Estate |
estate in realty held by tenant under a lease. Tenant has a qualified right to possess and/or use the land |
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Life Estate |
interest in land that exists only for the duration of the life of some person, usually the holder of the estate |
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Marketable Title |
Title to real estate that is reasonably free from encumbrances, defects in chain of title, and other matters that affect title |
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Periodic Tenancy |
A lease interest in land for an indefinite period involving payment of rent at fixed intervals, such as week-to-week |
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Quitclaim Deed |
a deed intended to pass any title, interest, or claim that grantor may have in the property, but not warranting that such title is valid offers least amount of protection against defects in title |
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Profit |
the right to enter onto and remove things form the property of another
i.e. removing leaves from yard |
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Special Warranty Deed |
a deed that warrants that the grantor held good title during their ownership of the property does not warrant against defects of title when held by previous owners |
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Tenancy at Suffrage |
after rightfully being in possession of leased premises, one then wrongfully continues to occupy the property after the lease has been terminated |
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Tenancy at Will |
either party can terminate the tenancy without notice; usually arise when tenant retains possession with landlord's consent, after the tenancy for years has terminated |
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Tenancy by the Entirety |
the joint ownership of property by a husband and wife; neither can transfer their interest without the consent of the other |
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Tenancy in Common |
Co-ownership of property, in which each party owns an undivided interest that pass to their heirs at death |
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Warranty Deed |
deed in which grantor guarantees that they have the title to the property conveyed in the deed, there are no hidden encumbrances, and they will enjoy quiet possession of the property greatest protection for grantee |
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Adverse Possession |
acquisition of title to real property by occupying it openly, without consent, for a certain period of time. Occupation must be actual, open, notorious, exclusive and in opposition to all others, including the owner (two people fighting if land is theirs) |
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What rights are included in the ownership of real estate? |
-Right to give, sell, dispose of property by deed or will -Right of possession and use at their discretion |
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What are the other rights in real property? |
fee simple absolute life estates concurrent ownership leasehold estates non-possessory interest (easements, profits) |
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In what situation does adverse possession apply? |
1) Possession must be actual and exclusive 2) It must be open, visible, notorious 3) IT must be continuous and peaceable for required period of time 4) It must be hostile/adverse (w/o permission) |
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Binder |
a written, temporary insurance policy |
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Coinsurance Clause |
clause in a contract that encourages property owners to insure their property for an amount as close to full value as possible. (up to 80% - company will recover any loss up to the face value) |
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Insurable Interest |
one must have an interest in something in order to insure it |
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Premium |
the consideration pid by the insured to the insurer for insurance protection for a specified period of time |
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Term Insurance |
type of life insurance policy for which premiums are paid; payment is due only if death occurs within the term period; less expensive than for whole life or limited-payment life |
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Universal Life Insurance |
company makes two deductions from every payment - 1) charge for term insurance protection; 2) company expenses and profit; what remains earns interest for holder at rate determined by company; -cash value grows at variable interest rate -type combines term with whole life insurance |
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Whole Life Insurance |
insurance policy in which insured pays a level premium for their entire life and there is a constantly accumulating cash value that can be withdrawn or borrowed against by buyer |
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How do you compensate limits of liability under the coinsurance clause? |
Loss * (amount of insurance coverage / (coinsurance % * property value)) =Amount of Recovery |
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How are losses divided with multiple insurance coverage? |
if multiple policies cover a loss and coverage exceeds loss, then insured collects proportionate share of liability form each company i.e. 50,000 damage. both companies insure for 40,000. each pay 25,000. |
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How are limits expressed for automobile insurance? |
100/300/50 up to 100K for one person up to 300K for more than one person max of 50K for property damage |
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Uninsured Motorist Coverage |
Insures driver and passengers against injury caused by any driver without insurance or by a hit-and-run driver |
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Bequest |
a gift by will of personal property |
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Codicil |
a written supplement or modification to a will; must be executed with the same formalities |
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Devise |
to make a gift of real property by will |
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Executor |
a person appointed by a testator to see that their will is administered appropriately |
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Holographic Will |
a will written entirely in the signer's handwriting and usually not witnessed |
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Intestate |
one who has died without having created a valid will |
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Nuncupative Will |
an oral will made before witnesses (usually limited to transfers of personal prop.) |
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Testate |
the condition of having died with a valid will |
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Testator |
one who makes and executes a will |
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Living Trust |
a trust created by a grantor and effective during their lifetime, inter vivos trust |
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Testamentary Trust |
a trust that is created by will and therefore does not take effect until the death of the testator |
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Spendthrift Trust |
a trust created to prevent the beneficiary form spending all of the money to which they are entitled. - instead of receiving a lump sum, they receive portions at any one time |
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What is abatement and how does it work? |
if the assets are insufficient to pay in full all general bequests provided for in the will, an abatement takes place which means the legatees receive reduced benefits |
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What are the 3 requirements for making a will in the state of Ohio? |
1) 18 years old 2) of sound mind 3) not under any undue influence |
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What are the statutory requirements for creating a will? |
1) Capacity/Intent (at least 18 and of sound mind/ intend to make will) 2) Writing (some allow oral in front of witnesses) 3) Signature at the END of the document 4) Witnesses (2-3) (may need to be disinterested) |
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How can a will be revoked? |
1) Physical destruction 2) Subsequent Writing 3) Operation of the law |
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What is the difference between Per Stirpes and Per Capita Distributions? |
Per Stirpes: children of descendent receive the share that their parent would have received (1/2 vs. 1/4) Per Capita: each child takes an equal share (1/3) |
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What are the elements of a trust? |
1) Designated beneficiary 2) Designated trustee 3) A fund sufficiently identified to enable title to pass to the trustee 4) Delivery by the grantor to the trustee with intention of passing title |
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What are the differences between general, specific and residual testamentary gifts? |
General: uses less restrictive terminology than specific (i.e. all my land/an amount of $) Specific: describes particular property that be distinguished from the rest Residuary: any assets remaining after specific gift have been made/debts paid |
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How does intestate distribution work? |
· Spouseand Children: spouse gets ½ if one child living or 1/3 if more than onechild (usually) if no children or grandchildren, spouse gets everything -No livingspouse or children: grandchildren then the parents of thedescendant; -Step children are not kin; adopted children are; |
