(A)Wolfe, Because Wolfe Had Title to the Table at the Time of Loss

Multiple Choice Questions

1.CPA QUESTIONOn Monday, Wolfe paid Aston Co., a furniture retailer, $500 for a table. On Thursday, Aston notified Wolfe that the table was ready to be picked up. On Saturday, while Aston was still in possession of the table, it was destroyed in a fire. Who bears the loss of the table?

(a)Wolfe, because Wolfe had title to the table at the time of loss

(b)Aston, unless Wolfe is a merchant

(c)Wolfe, unless Aston breached the contract

(d)Aston, because Wolfe had not yet taken possession of the table

Answer: D. CPA Examination, November 1989, #49.

2.CPA QUESTION Under UCC Article 9 on secured transactions, which of the following statements is correct concerning the disposition of goods by a secured creditor after a debtor defaults on a loan?

(a)A good faith purchaser of the goods for value and without knowledge of any defects in the sale takes free of any security interest.

(b)The debtor may not redeem the goods after the default.

(c)Secured creditors retain the right to redeem the goods after they are sold to a third party.

(d)The goods may be disposed of only at a public sale.

Answer: A. CPA Examination, May 1993, #50.

3.CPA QUESTIONQuick Corp. agreed to purchase 200 typewriters from Union Suppliers, Inc. Union is a wholesaler of appliances and Quick is an appliance retailer. The contract required Union to ship the typewriters to Quick by common carrier, “FOB Union Suppliers, Inc. Loading Dock.” Which of the parties bears the risk of loss during shipment?

(a)Union, because the risk of loss passes only when Quick receives the typewriters

(b)Union, because both parties are merchants

(c)Quick, because title to the typewriters passed to Quick at the time of shipment

(d)Quick, because the risk of loss passes when the typewriters are delivered to the carrier

Answer: D. CPA Examination, May 1994, #45.

4.Sheri signs a contract with Farmer Charlie on February 1 Under the deal, she will pay $25,000 for Charlie's entire pumpkin crop on October 1. Charlie plants pumpkin seeds on March 1, and they begin to sprout on April 1. When are the pumpkins identified?

(a)February 1

(b)March 1

(c)April 1

(d)October 1

Answer: B.

5.Sam obtains a PatekPhilipe watch from Greg by fraud. It has a retail price of $10,000. He sells it to Melissa for $9000. She believes he owns the watch. Melissa ______a bona fide purchaser. Sam disappears. If Greg discovers that she has the watch and demands that it be returned, Melissa ______have to give the watch to Greg.

(a)is; will

(b)is; will not

(c)is not; will

(d)is not; will not

Answer: B.