Question 2.2. Woody Pyle, a public warehouseman, issued Merlin a negotiable warehouse receipt for fungible goods stored. Pyle (Points : 2)

May not limit the amount of his liability for his own negligence. Is obligated to deliver the goods to Merlin despite Merlin's improper refusal to pay the storage charges due. Will be absolutely liable for any damages in the absence of a statute or a provision on the warehouse receipt to the contrary. May commingle Merlin's goods with similar fungible goods of other bailors.

Question 3.3. An accuracy-related penalty applies to the portion of tax underpayment attributable to I. Negligence or a disregard of the tax rules or regulations. II. Any substantial understatement of income tax. (Points : 2)

Neither I nor II. Both I and II. II only. I only.

Question 4.4. On March 1, Mirk Corp. wrote to Carr offering to sell Carr its office building for $280,000. The offer stated that it would remain open until July 1. It further stated that acceptance must be by telegram and would be effective only upon receipt. For this question only, assume that on May 10, Mirk mailed a letter to Carr revoking its offer of March 1. Carr did not learn of Mirk's revocation until Carr received the letter on May 17. Carr had already sent a telegram of acceptance to Mirk on May 14, which was received by Mirk on May 16. Which of the following statements is correct? (Points : 2)

Carr's telegram of acceptance was effective on May 14. Carr's telegram of acceptance was effective on May 16. Mirk's offer of March 1 was irrevocable and therefore could not be withdrawn prior to July 1. Mirk's letter of revocation effectively terminated its offer of March 1 when mailed.

Question 5.5. The rule limiting the allowability of passive activity losses and credits applies to (Points : 2)

Partnerships. Widely-held C corporations. Personal service corporations. S corporations.

Question 6.6. Rachel, Inc. (Rachel) has a $500,000 airport construction project contract. The estimated total costs are $400,000. In the first year, incurred costs are $200,000. What is Rachels change in retained earnings at the end of the first fiscal year, if it uses the following revenue recognition methods? Percentage-of-completion Completed contract (Points : 2)

$0 $0 $50,000 $0 $100,000 $50,000 $50,000 $50,000

Question 7.7. A penalty for understated corporate tax liability can be imposed on a tax preparer who fails to (Points : 2)

Audit the corporate records. Make reasonable inquiries when taxpayer information appears incorrect. Copy all underlying documents. Examine business operations.

Question 8.8. Which of the following actions requires an agent for a corporation to have a written agency agreement? (Points : 2)

Hiring an independent general contractor to renovate the principal's office building. Retaining an attorney to collect a business debt owed the principal. Purchasing office supplies for the principal's business. Purchasing an interest in undeveloped land for the principal.

Question 9.9. The mailbox rule generally makes acceptance of an offer effective at the time the acceptance is dispatched. The mailbox rule does not apply if: (Points : 2)

Both the offeror and offeree are merchants. The offer provides that an acceptance should not be effective until actually received. The duration of the offer is not in excess of three months. The offer proposes a sale of real estate.