 you would look at previously used CPA questions that were released by the AI CPA. Those questions covered the section of the exam. Those questions are for real. They may or may not appear in the future, but the concepts and the way the questions are asked, you may see them on the actual exam day. So you ought to be familiar with those questions, be comfortable answering them, be comfortable with the terms, be comfortable with the concepts, because surely you're going to see them again. As always, I would like to remind you to connect with me on LinkedIn if you haven't done so. YouTube is where you would need to subscribe. I have 1600 plus accounting, auditing, tax, and finance lecture. This is a list of all the courses that I cover, including hundreds of CPA questions. On my website, I have additional resources such as PowerPoint slides, notes, multiple choice, true, false, exercises, which are quasi CPA simulations and 2000 plus CPA questions. Please check out my website if you are serious about passing the exam. Let's take a look at the first question. Which of the following circumstances generally would cause a discharge of contractual duties by operation of law? Well, simply put, this is a business law question. They're asking us, under what circumstances you don't have to perform? Simply put, you are a discharge of your contractual duties. But specifically, they say contractual duties by operation of law. Let's take a look at the answers. And here we have four different answers. And you have to understand the answers. In other words, you have to understand the answers in order to apply them. In order to apply them. Like this, this is remembering and understanding. I'd say this is closer to application, but we'll look at it in a moment. First is novation. First is novation. So what is novation? Well, novation is a form of a discharge. Okay, so this is a discharge of contractual duties. Okay, so far so good. Is it by operation of law? No, how does novation work? I'll tell you what happened. When I went to school, my third year, I went the first two years to a community college. The third year, I applied to a four year school, which is called Bloomsburg University. But I applied a little bit late. So I was accepted. So what I want was after I was accepted, I was excited. So I went down, I went up actually to Bloomsburg, the town, and I was looking for a place to live. And what happened is I find I found someone who wants to move out. Okay, Justin wants to move out. And Justin wanted somebody to take over the lease, to take over the lease. Why? Because his lease, I believe he had three, four months ago. Like his lease, we had four months ago. Okay, and he did someone to take over the lease. But he had to get the landlord permission. He had the landlord permission. So simply put, the landlord told him, I will discharge you from the lease if you find someone that will take over your duties. And I was happy to do it because I needed a place to live. I was like, okay, no problem. This is what innovation is. In innovation, all three parties has to agree. I had to agree. Justin had to agree. And the landlord had to agree. And this is not a discharge by operation of law. This is discharged by agreement. Basically, we all agreed upon this. And the landlord said, that's okay, I would let you, you can let go of your duties, Farhat will take over. So that's not the answer because it's not by operation of law. Accord and satisfaction. Again, this is basically also a relief, a discharge of your contractual obligation. But basically, what you're doing here is you're substituting your previous performance with a new performance. Let's assume I owe you $1,000. I owe you $1,000. And this is the agreement. I have to pay you $1,000 for some reason. What I can do, I would say in the contract that says I have to pay you $1,000. I'm sorry, I don't have $1,000. I can paint your home. I'm not a best painter, but I will try it. I can paint. I think I can do a decent job. I'm not a handy person, but I think I can paint. I can paint your home. Well, guess what? You say, yeah, that's fine. You paint my home, and I will discharge you. Well, this is accord and satisfaction. I substitute my performance, my original performance with another new performance. So I get this charge of my contractual duties, but not by operation of law because we agreed upon it. Okay, so B is out because it's not by operation of law. So if we stop here, A and B could be answers, could be correct answers, but by operation of law, we're going to see what that means. Okay, so the first two is by a new agreement, basically. Anticipatory repudiation. What does that mean? It means I signed the contract and I told you in advance, look, I'm going to breach the contract. Well, if I say so, will I be discharged of my contractual duties? Absolutely not. Guess what? I'm going to be in some legal trouble, so that's definitely out. By process of elimination, D is the answer, impossibility of performance. Now, there's two types of impossibility of performance here. They did not specify them, but the fact that it's impossibility of performance, it will discharge by operation of law. There's what's something called subjectivity and objectivity. Subjectivity, impossibility of performance means it's difficult for you to perform. Nevertheless, you could still perform. Objectivity performance, it means you cannot perform in fact. Let's assume you promise to deliver 2000 pounds of apples, 2000 pounds of apples from your orchard. Guess what? You signed the contract, I will deliver all of this by August. August, let's see, August 2020. And you signed the contract and they paid you. That's it. You have a valid contract. You cannot get out of it. Now, what happened is this. Here comes the winter of 2020 and something happened. The weather was bad and you could not deliver 2000 pounds of apple because your orchard did not produce 2000 pounds of apples. Okay. Are you discharged off your contractual agreement? Well, it's not your fault. It's the weather. Well, you are still responsible because now you're supposed to go somewhere else and get the 2000 pounds. You're supposed to satisfy the performance. Well, it's not your fault. Nevertheless, you still have to perform. Okay. Let's assume you signed a contract to sell. Let's assume just for the sake of illustration, you wanted to sell a medal, a real medal, okay, a real medal that you purchased. It's an antique medal. It's an antique Olympic medal. That's unique. Okay. Just made this up. It's a medal. It's an antique medal from the 1932 Olympics. Who cares from the 1932 Olympics? Now, what happened is you signed the contract, but the night before you deliver, the medal was actually stalling. The medal was actually stalling. If that's the case, if the medal was stalling, then you cannot perform yet because the medal is so unique that you cannot get another one. It's unique. The fact that it's unique, you can't get another one. So under those circumstances, your contractual duties are discharged by operation of law. So that's called an objective impossibility, like you cannot really perform. So the answer is D. Notice in this question, it has four different terms and they could throw these terms on you in different circumstances. So you have to know these terms. Okay. Number seven, brown cosine royals, 50,000 note to state bank. Oh, be careful. Don't cosine anything. Athroyal is later adjugated mentally incompetent. So they was declared mentally incompetent. What would be Brown's liability on the note? Look, I'm going to tell you, I don't even have to read the answers. If you cosine someone's loan, don't ever do that. You are primarily responsible. Okay, you are primarily responsible for that loan. Okay, so that's it. You have to pay the bank the loan. Know if and that's about it. Hey, you are liable to pay the state bank on the due date of the note. Absolutely. Yes. That's your that's your that's your that's your responsibility. I would say a I will go with a and I don't have time. I don't keep going, but I'm going to go and just show you the other ones liable to pay state only if state first seek payment from Royal. They don't have to seek payment from Royal. They can go after you. You cosine that loan. They can come after you. They don't have to go through Royal first to collect from Royal. So B is out. Not liable to pay state. Yes, you are because Royal Incumbency discharged Royalty as a surety. No, just because, you know, they were discharged. It doesn't mean you were discharged. That's why they banged. They ask you to to be the surety for the loan. So this way, in case they discharged Royal, they come after you. So not at all. You are still responsible, not liable to pay state unless Brown was compensated surety. No, doesn't have to be compensated surety here. You don't, you know, simply put, Royal doesn't have to pay you anything that Brown anything. They don't have it. Just once you cosine the loan, you're primarily responsible. They don't have to come and compensate you before you pay. So that's a D is out as I told you a is the right answer because that's it. You are responsible. So that's why in the real world, don't cosine the loan for anyone because you are responsible. It doesn't matter whether you saw the money, spend the money, never saw the money. Don't cosine anything. That's my advice to you because you are liable as much as the person that took the money, which of the following statement is correct regarding the Federal Unemployment Tax Act, FUDA. So there's three incorrect and one correct. An employee who resigns regardless of the cause is eligible for unemployment benefits. Hopefully you don't select this answer. So simply put this answer saying if you just resign, you can collect unemployment. That's not how it works. The Federal Unemployment, it works when you are laid off. If it's not within your power, but each law is different, but definitely if you resign, you don't, you can't collect. Now, somebody might email me, yes, that's happened before as an exception. Yes, there's always exception, but that's not how it works. The Federal Unemployment System, believe me, if that's the case, anyone who is not happy at their work, they will resign and collect. That's not how it works. The A is out. The Federal Unemployment System is funded by both employer and employee. No, Federal Unemployment only paid by the employer. You don't pay it. Employee don't pay it. Therefore, you just have to memorize this. B is out. The Act is intended to assist workers who are permanently out of work and need assistance in supporting themselves. Is this what FUDA is? No, that's why we have something called social security for disabled people. So C is out. The unemployment insurance system is administered by the state through unemployment laws. Yes, the unemployment insurance system is administered by the states through their employment laws. That's exactly how it works. So if you lost your job, your unemployment insurance, the state pay you. The state pay you, not the through it. None of these statements is correct. The only statement is D. So unemployment insurance is administered by the state through the employment of laws. Now, the federal, they will intervene and send them some help if need be. The federal government, but they don't pay. They don't compensate the employees. The state compensate the employees. At some point, I was laid off in the state of New Jersey. I was paid not by the state in New Jersey. I was laid off by a company in New Jersey. I collected from the state of New Jersey. I did not collect from the federal government from FUDA. D, a partner and a general partnership is usually not entitled to which of the following. So we're talking about a general partnership. A general partnership means everybody is a general partner. Be careful when you sign up for that. They're not entitled to what to participate in management, not at all. You're a general partner. You are the manager. You are responsible for everything to review accounting record. If you're managing your own review accounting record, that's out to enter into a contract with a third party without the consent of the other partner. You are the general partner. You can do that. Basically, a general partner. It's like you are your own entrepreneur. So by the process of elimination, D is the answer to be liable only for personal negligence. Guess what? No, you are liable for everyone, not only yours. You are liable for personal negligence, whether it's yours or the other partners. Once you are partner in that partnership, you have to be careful because you have to be careful because you don't have that protection. You don't have that protection. Which of the following statements is correct? So one statement is correct regarding a shareholder's right to inspect the corporate books and record. The right is an absolute right. Well, once you see those answers, like on the extreme, think about it. If you're a shareholder right, which I own stocks in Apple, I own stocks in Amazon. Do you think I can inspect their books? Is this an absolute right? Absolutely not. It's conditioned upon the demanding shareholder at least $5,000 worth of stocks. Come on. So no, it's if you own more than $5,000, that's like no, that's also you should if you think about it, that's wrong. So we're down to 50-50. Requires that the demand to inspect for a proper purpose. If there's a proper purpose, yes, if there's a proper purpose you can request. Let's look at D. Exists only when fraud or illegality is alleged. If that's the case, you would hire an auditor, you and other shareholders to perform an audit for fraud, but D is not the answer. So simply put, you cannot just inspect the books for personal reasons, like you want to know how much money they are making this quarter, maybe to buy the stocks or anything like this. But if there's a proper purpose under certain circumstances, maybe a court order, it's possible. So let's keep it here for a proper purpose. You can demand to inspect the books. So basically in the next session, we would look at additional questions. Again, go to my website. I have hundreds of questions worked like this as well as multiple choice, true, false, notes, PowerPoint slides, all sorts of resources that's going to help you pass the CPA exam. You're going to invest in your CPA once in your lifetime, do it properly, subscribe to my service. It's a minimal amount for a great investment. Good luck. Study hard. I'm always here to help you.