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Question: 1. Guyan Machinery, a West Virginia manufacturing


1. Guyan Machinery, a West Virginia manufacturing corporation, hired Albert Voorhees as a salesman and required him to sign a contract stating that if he left Guyan he would not work for a competing corporation anywhere within 250 miles of West Virginia for a two-year period. Later, Voorhees left Guyan and began working at Polydeck Corp., another West Virginia manufacturer. The only product Polydeck made was urethane screens, which comprised half of 1 percent of Guyan’s business. Is Guyan entitled to enforce its noncompete clause?
2. Barbara Richards leased an apartment at a complex owned by Twin Lakes. The lease declared that Twin Lakes would maintain the common areas, but it would not be responsible for any harm, anywhere on the property, even if it was caused by Twin Lakes’ negligence. Richards slipped and fell on show-covered ice in the Twin Lakes parking lot. What result?
3. The Basultos were Cuban immigrants who spoke only Spanish. When they purchased a new minivan from Potamkin Dodge, the dealer had them sign a blank, English-language contract with the promise that he would fill in the agreed-upon numbers later. But then the dealer completed the sales contract with numbers that were higher than those agreed upon. The couple tried to sue, only to realize that they had inadvertently signed away their rights because the contract contained, in tiny print, an arbitration clause. What remedy is available to the Basultos?
4. Cranwell Associates owned a 42-story skyscraper in midtown Manhattan. The building had a central station fire alarm system, which was monitored by Holmes Protection. A fire broke out and Holmes received the signal. But Holmes’s inexperienced dispatcher misunderstood the signal and failed to summon the fire department for about nine minutes, permitting tremendous damage. 810 sued Holmes, which defended based on an exculpatory clause that relieved Holmes of any liability caused in any way. Holmes’s dispatcher was negligent. Does it matter how negligent he was?
5. You Be the Judge: WRITING PROBLEM Oasis Waterpark, located in Palm Springs, California, sought out Hydrotech Systems, Inc., a New York corporation, to design and construct a surfing pool. Hydrotech replied that it could design the pool and sell all the necessary equipment to Oasis, but could not build the pool because it was not licensed in California. Oasis insisted that Hydrotech do the construction work because Hydrotech had unique expertise in these pools. Oasis promised to arrange for a licensed California contractor to “work with” Hydrotech on the construction; Oasis also assured Hydrotech that it would pay the full contract price of $850,000, regardless of any licensing issues. Hydrotech designed and installed the pool as ordered. But Oasis failed to make the final payment of $110,000. Hydrotech sued. Can Hydrotech sue for either breach of contract or fraud (trickery)?
Argument for Oasis: The licensing law protects the public from incompetence and dishonesty. The legislature made the section strict: no license, no payment. If the court were to start picking and choosing which unlicensed contractors could win a suit, it would be inviting incompetent workers to endanger the public and then come into court and try their luck. That is precisely the danger the legislature seeks to avoid.
Argument for Hydrotech: This is not the kind of case the legislature was worried about. Hydrotech has never solicited work in California. Hydrotech went out of its way to avoid doing any contracting work, informing Oasis that it was unlicensed in the state. Oasis insisted on bringing Hydrotech into the state to do work. If Oasis has its way, word will go out that any owner can get free work done by hiring an unlicensed builder. Make any promises you want, get the work done to your satisfaction, and then stiff the contractor—you’ll never have to pay.


> What are the advantages and disadvantages of hiring a lawyer to draft or review a contract?

> 1. Chitika, Inc. provided online tracking tools on websites. When consumers clicked the “opt-out” button, indicating that they did not want to be tracked, they were not – for ten days. After that, the software would resume tracking. Is there a legal prob

> 1. At approximately 7:50 pm bells at the train station rang and red lights flashed, signaling an express train’s approach. David Harris walked onto the tracks, ignoring a yellow line painted on the platform instructing people to stand back. Two men shout

> Walgreens operated a pharmacy in the Sara Creek mall. As part of this long-term lease, Sara Creek agreed not to lease mall space to another pharmacy. During an economic recession, Sara Creek’s largest tenant left and the landlord informed Walgreens that

> PepsiCo entered into a contract to sell its corporate jet to Klein for $4.6 million. Before the deal closed, the plane was sent to pick up PepsiCo’s chairman of the board, who was stranded at Dulles airport. The chairman then decided that the company sho

> 1. You are a vice-president in charge of personnel at a large manufacturing company. In-house detectives inform you that Gates, an employee, was seen stealing valuable computer equipment. Gates denies the theft, but you believe the detectives and fire hi

> 1. You Be the Judge: WRITING PROBLEM. An undercover drug informant learned from a mutual friend that Philip Friedman “knew where to get marijuana.” The informant asked Friedman three times to get him some marijuana, and Friedman agreed after the third re

> 1. The following agency is charged with the regulation of electronic communications: A. National Security Agency B. Federal Trade Commission C. Federal Communications Commission D. None of the above 2. Because Blaine Blogger reviews movies on his blog,

> Krug International, an Ohio corporation, had a contract with Iraqi Airways to build aeromedical equipment for training pilots. Krug then contracted for Power Engineering, an Iowa corporation, to build the specialized gearbox to be used in the training eq

> Evans built a house for Sandra Dyer, but the house had some problems. The garage ceiling was too low. Load-bearing beams in the “great room” cracked and appeared to be steadily weakening. The patio did not drain properly. Pipes froze. Evans wanted the mo

> 1. You plan to open a store in Chicago, specializing in rugs imported from Turkey. You will work with a native Turk who will purchase and ship the rugs to your store. You are wise enough to insist on a contract establishing the rights and obligations of

> Jacobs Builders entered into a contract with Kent to build him a home. The agreement stated that Jacobs would use only certain brand-name materials. Upon completion of the home, Kent discovered that Jacobs had installed high-quality, but not brand-name,

> Westinghouse sold uranium in long-term contracts at fixed prices, betting that market prices would be stable or fall (as they had been). But this was a bad bet: Uranium prices skyrocketed as a result of a cartel. Faced with large losses if it had to fulf

> 1. In the landmark 1965 case of Griswold v. Connecticut, the Supreme Court examined a Connecticut statute that made it a crime for any person to use contraception. The majority declared the law an unconstitutional violation of the right of privacy. Justi

> 1. In 1988, terrorists bombed Pan Am Flight 103 over Lockerbie, Scotland, killing all passengers on board. Congress sought to remedy security shortcomings by passing the Aviation Security Improvement Act of 1990, which, among other things, ordered the Fe

> 1. If your grandparents were to die leaving a large estate and all of their children were also dead, would you prefer a per stirpes or per capita distribution? 2. You Be the Judge: WRITING PROBLEM Linda and Eddie had two children before they were divorce

> Nationwide Discount Furniture hired Rampart Security to install an alarm in its warehouse. A fire would set off an alarm in Rampart’s office, and the security company was then supposed to notify Nationwide immediately. A fire did break out, but Rampart a

> A century and a half ago an English judge stated: “All painters do not paint portraits like Sir Joshua Reynolds, nor landscapes like Claude Lorraine, nor do all writers write dramas like Shakespeare or fiction like Dickens. Rare genius and extraordinary

> 1. Two cars, driven by Fred and Barney, collide. At trial, the jury determines that the accident was 90% Fred's fault and 10% Barney's fault. Barney's losses total $100,000. If he lives in a state that uses contributory negligence, Barney will recover __

> 1. While in college, David invented a new and useful machine to make macaroni and cheese (he called it the “Mac ‘n’ Cheeser”). It was like nothing on the market, but David did not apply for a patent. At that time, he offered to sell his invention to seve

> 1. Tariq Ahmad decided to dispose of some of his laboratory’s hazardous chemicals by shipping them to his home in Pakistan. He sent the chemicals to Castelazo (a company in the United States) to prepare the materials for shipment. Ahmad did not tell the

> A disc jockey named Z-Trip made a remix of a Beastie Boys song with the hip-hop group’s permission. Monster Energy (ME), an energy drink company, wanted to use the remix as part of a video promotion. Monster Energy sent an email asking Z-Trip to approve

> Mast Industries and Bazak International were two textile firms. Mast orally offered to sell certain textiles to Bazak for $103,000. Mast promised to send documents confirming the agreement, but never did. Finally, Bazak sent a memorandum to Mast confirmi

> ETHICS Jacob Deutsch owned commercial property. He orally agreed to rent it for six years to Budget Rent-A-Car. Budget took possession, began paying monthly rent, and over a period of several months expended about $6,000 in upgrading the property. Deutsc

> When Steven Simkin and Laura Blank divorced in 2006, they agreed to split their $13.5 million fortune evenly. Two years later, it became evident that Simkin had a problem: his half was invested in Bernard Madoff’s giant Ponzi scheme and he lost millions.

> 1. Pfizer Inc. paid $2.3 billion to settle civil and criminal charges alleging that it had illegally marketed 13 of its most important drugs. This settlement made history, but not in a good way. It was both the largest criminal fine and the largest settl

> Paula was alone, pregnant, and confused. She needed help and support, which she found at Methodist Mission Home of Texas. In the days following her child’s birth, representatives of Methodist Mission forcefully told her that she had no moral or legal rig

> Ball-Mart, a baseball card store, had a 1968 Nolan Ryan rookie card in almost perfect condition for sale. Any baseball collector would have known that the card was worth at least $1,000; the published monthly price guide listed its market value at $1,200

> 1. Arthur, John, and George formed a partnership to drill and maintain cesspools for two years. After less than two months, John and George sent a letter to Arthur informing him that they were dissolving the partnership. Arthur sued the two other men, as

> 1. Jane writes an article for a newspaper reporting that Ann was arrested for stealing a car. The story is entirely false. Ann is not a public figure. Which of the following torts has Jane committed? A. Ordinary slander B. Slander per se C. Libel D. None

> 1. Alan Dershowitz, a law professor famous for his prominent clients, joined with other lawyers to open a kosher delicatessen, Maven’s Court. Dershowitz met with greater success at the bar than in the kitchen—the deli failed after barely a year in busine

> 1. An employer placed a job advertisement for security guards, specifying that applicants had to be United States citizens. It also required applicants to present a social security card. Was this ad legal? 2. In the 2008 recession, Roger lost his job as

> 1. A Saudi Arabian government-run hospital hired American Scott Nelson to be an engineer. The parties signed the employment agreement in the United States. On the job, Nelson reported that the hospital had significant safety defects. For this, he was arr

> 1. Apex gave Marcie an unemployment handbook stating that (1) she was an at-will employee, (2) the handbook did not create any contractual rights, and (3) employees who were fired had the right to a termination hearing. The company fired Marcie, claim

> 1. An elementary school custodian hit a child who wrote graffiti on the wall. Is the school district liable for this intentional tort by its employee? 2. What if the custodian hit one of the schoolchildren for calling him a name? Is the school district l

> Richard and Michelle Kommit traveled to New Jersey to have fun in the casinos. While in Atlantic City, they used their MasterCard to withdraw cash from an ATM conveniently located in the “pit” - the gambling area of a casino. They ran up debts of $5,500

> 1. One of Doris’s job responsibilities at Winkie, Inc. was preparing company checks for the president, Willie, to sign. Using Winkie’s check-signing machine, Doris forged $150,000 of checks on her employer’s account. Willie did not (1) look at the sequen

> 1. Kay signed a promissory note for $220,000 that was payable to Investments, Inc. The company then indorsed the note over to its lawyers to pay past and future legal fees. Were the lawyers holders in due course? 2. Shelby wrote the following check to Da

> 1. Eugene Ables ran an excavation company. He borrowed $500,000 from the Highland Park State Bank. Ables signed a note promising to repay the money and an agreement giving Highland a security interest in all of his equipment, including after-acquired equ

> 1. Mastercraft Boat manufactured boats and often used instrument panels and electrical systems assembled and/or manufactured by Ace Industries. Typically, Ace would order electrical instruments and other parts and assemble them to specifications that Mas

> 1. In a criminal case, which statement is true? A. The prosecution must prove the government’s case by a preponderance of the evidence. B. The criminal defendant is entitled to a lawyer even if she cannot afford to pay for it herself. C. The police are

> 1. Franklin Miller operated Miller Seed Co. in Pea Ridge, Arkansas. He bought, processed, and sold fescue seed, which is used for growing pasture and fodder grass. Farmers brought seed to Miller who would normally clean, bag, and store it. In some cases,

> Each time employees at BizCorp enter their work computers, the following alert appears: “You are attempting to access the BizCorp network. By logging in, you agree to BizCorp’s Computer Usage Policy and certify that your use of this computer is strictly

> Ryan Leslie, a rapper, was distraught when someone stole his computer and external hard drive because they contained some music he was writing. In an effort to retrieve his items, he created a series of YouTube videos, news articles, and social media pos

> 1. Lewis signed a contract for the rights to all timber located on Nine Mile Mine. He agreed to pay $70 per thousand board feet ($70/mbf). As he began work, Nine Mile became convinced that Lewis lacked sufficient equipment to do the job well and forbade

> 1. Commercial Union Insurance Co. (CU) insured Redux, Ltd. The contract made CU liable for fire damage, but stated that the insurer would not pay for harm caused by criminal acts of any Redux employees. Fire destroyed Redux’s property. CU claimed that th

> The day after Thanksgiving, known as Black Friday, is the biggest shopping day of the year. One major retailer advertised a “Black Friday only” laptop for $150. On Thanksgiving night, hundreds of people waited for the store to open to take advantage of t

> Case law tells us that a course syllabus is not a binding contract—but how about your school’s honor code? Under what conditions could an honor code be a contract?

> Some laws give consumers the right to cancel certain contracts for any reason within a short period of time after entering into them. For example, consumers in the European Union can return anything purchased online for any reason or no reason at all. Co

> 1. American Bakeries had a fleet of over 3,000 delivery trucks. Because of the increasing cost of gasoline, the company was interested in converting the trucks to propane fuel. It signed a requirements contract with Empire Gas, in which Empire would conv

> When Steven was killed in an automobile accident, he left his wife, Debra a life insurance policy for $60,000. She decided to move from Bunkie to Sulphur, Louisiana. Debra executed a document authorizing her mother-in-law, Helen, to sign checks on Debra’

> 1. A bill is vetoed by ___. A. the Speaker of the House B .a majority of the voting members of the Senate C. the President D. the Supreme Court 2. If a bill is vetoed, it may still become law if it is approved by ___. A. Two-thirds of the Supreme Court B

> What are some patterns that could be found using diagnostic analysis? Between which types of variables?

> What does a Z-score greater than three (or minus three) suggest? How is that useful in finding extreme values? What type of analysis should we do when we find extreme or outlier values?

> One of the benefits of Data Analytics is the ability to see and test the full population. In that case, why is sampling (even monetary sampling) still used, and how is it useful?

> One type of descriptive analytics is age analysis. Why are auditors particularly interested in the aging of accounts receivable and accounts payable? How does this analysis help evaluate management judgment on collectability of receivables and potential

> Implementing continuous auditing procedures is similar to automating an audit plan with the additional step of scheduling the automated procedures to match the timing and frequency of the data being evaluated and the notification to the auditor when exce

> What approach should a company make if its continuous audit system has too many alarms that are false positives? How would that approach change if there are too many missed abnormal events (such as false negatives)?

> Simple to complex Data Analytics can be applied to a client’s data during the planning stage of the audit to identify which areas the auditor should focus on. Which types of techniques or tests might be used in this stage?

> Who developed the audit data standards? In your opinion, why is it the right group to develop and maintain them rather than, say, the Big 4 firms or a small practitioner?

> Consider Exhibit 5-3. Looking at the audit data standards order-to-cash process, what function is there for the AR Adjustments transaction table—that is, adjustments to the Accounts Receivable? Why is this an audit data standard, and why is it important

> What are the advantages of the use of homogeneous systems? Would a merger target be more attractive if it used a similar financial reporting system as the potential parent company?

> Regarding the data request form, why do you think it is important to the database administrator to know the purpose of the request? What would be the importance of the “To be used in” and “intended audience” fields?

> In your opinion, is the primary reason that analysts use inappropriate scales for their charts primarily due to an error related to naiveté (or ineffective training), or are the inappropriate scales used so the analyst can sway the audience one way or th

> Datavizcatalogue.com lists seven types of maps in its listing of charts. Which one would you use to assess geographic customer concentration by number? How could you show if some customers buy more than other customers on such a map? Would you use the sa

> The Big 4 accounting firms (Deloitte, EY, KPMG, and PwC) dominate the audit and tax market in the United States. What chart would you use to show which accounting firm dominates in each state in terms of audit revenues? Any there other interesting ways y

> According to Exhibit 4-8, which is the best chart for static composition of a data item of the Accounts Receivable balance at the end of the year? Which is best for showing a change in composition of Accounts Receivable over two or more periods?

> According to Exhibit 4-8, which is the best chart for comparisons of earnings per share over many periods? How about for only a few periods?

> Evaluate the use of multiple colors in the graphic associated with the opening vignette regarding the 2016 presidential election. Would you consider its use effective or ineffective? Why? Can you think of a better way to communicate the extent to which p

> Why was the graphic associated with the opening vignette regarding the 2016 presidential election an effective way to communicate the voter outcome for 50 states? What else could have been used to communicate this, and would it have been more or less eff

> Name three accounts that it would be appropriate and interesting to apply Benford’s Law in auditing those accounts? Why would an auditor choose those three accounts? When would a departure from Benford’s Law encourage the auditor to investigate further

> How could XBRL be used by an investor to do an analysis of the industry’s inventory turnover?

> Why would the use of data reduction be useful to highlight related party transactions (e.g., CEO has her own separate company that the main company does business with)?

> In the ETL process, when an analyst is completing the data request form, there are a number of fields that the analyst is required to complete. Why do you think it is important for the analyst to indicate the frequency of the report? How do you think tha

> How might clustering be used to explain customers that owe us money (accounts receivable)?

> An auditor is trying to figure out if the goodwill its client recognized when it purchased a factory has become impaired. What characteristics might be used to help establish a model predicting goodwill impairment?

> An auditor is trying to figure out if the inventory at an electronics store chain is obsolete. What characteristics might be used to help establish a model predicting inventory obsolescence?

> Related party transactions involve people who have close ties to an organization, such as board members. Assume an accounting manager decides that fuzzy matching would be a useful technique to find undisclosed related party transactions. What data would

> Use the College Scorecard data to determine if different regions of the country have significantly different costs of attendance (same as Problem 6 above) and fill out a data request form in order to extract the appropriate data. Use the template from th

> Which attributes from the College Scorecard data would you need to determine if different regions of the country have significantly different costs of attendance?

> Which attributes from the College Scorecard data would you need to compare the percentage of students who receive federal loans at universities above and below the median cost of attendance across all institutions (public, private non-profit, or private

> Which attributes from the College Scorecard data would you need to compare completion rate across types of institutions (public, private non-profit, or private for-profit)?

> Which attributes from the College Scorecard data would you need to compare levels of diversity across types of institutions (public, private non-profit, or private for-profit)?

> Which attributes from the College Scorecard data would you need to compare SAT scores across types of institutions (public, private non-profit, or private for-profit)?

> What is included in mastering the data as part of the IMPACT cycle described in the chapter?

> If you were conducting a data analysis in order to compare the percentage of students who receive federal loans at universities above and below the median cost of attendance across all institutions, you would be conducting several steps in your analysis.

> If you were analyzing the levels of diversity across public and private institutions using the College Scorecard data, how would you define diversity in terms of the data provided? Would it be beneficial to combine fields?

> Consider the 2013 declined loan data from Lending Club titled “RejectStatsB2013.” Similar to the analysis done in the chapter, let’s scrub the employment length. Because our analysis requires risk scores, debt-to-income data, and employment length, we ne

> Consider the 2013 declined loan data from LendingClub titled “RejectStatsB2013.” Similar to the analysis done in the chapter, let’s scrub the debt-to-income data. Because our analysis requires risk scores, debt-to-income data, and employment length, we n

> Consider the 2013 declined loan data from LendingClub titled “RejectStatsB2013” from the Connect website. Similar to the analysis done in the chapter, let’s scrub the risk score data. First, because our analysis requires risk scores, debt-to-income data,

> Download the rejected loans dataset of LendingClub data titled “Reject Stats A Ready” from the Connect website and do an Excel PivotTable by state; then figure out the number of rejected applications for each state. Reorder these and make a graph orderin

> 1. Mastering the data can also be described via the ETL process. The ETL process stands for: a. Extract, total, and load data. b. Enter, transform, and load data. c. Extract, transform, and load data. d. Enter, total, and load data. 2. The goal of the ET

> 1. Big Data is often described by the three Vs, or a. Volume, velocity, and variability. b. Volume, velocity, and variety. c. Volume, volatility, and variability. d. Variability, velocity, and variety. 2. Which approach to Data Analytics attempts to assi

> 1. The DuPont analysis of return on equity (ROE) includes all of the following component ratios except: a. Asset turnover. b. Inventory turnover. c. Financial leverage. d. Profit margin. 2. XBRL stands for: a. Extensible Business Reporting Language. b. E

> 1. What would you consider to be Financial Performance KPIs? a. Total Shareholder Return b. Customer Profitability Score c. Market Growth Rate d. Klout Score 2. What would you consider to be an Operational KPI? a. Inventory Shrinkage Rate b. Brand Equity

> In the ETL process, the first step is extracting the data. When you are obtaining the data yourself, what are the steps to identifying the data that you need to extract?

> 1. Which items would be currently out of scope for Data Analytics? a. Direct observation of processes b. Evaluation of time stamps to evaluate workflow c. Evaluation of phantom vendors d. Duplicate payment of invoices 2. What would be the sampling interv

> 1. Under the guidance of the chief audit executive (CAE) or another manager, these individuals build teams to develop and implement analytical techniques to aid all of the following audits except: a. Process efficiency and effectiveness. b. Governance, r

> 1. Gold, silver, and bronze medals would be examples of: a. Nominal data. b. Ordinal data. c. Structured data. d. Test data. 2. In the late 1960s, Ed Altman developed a model to predict if a company was at severe risk of going bankrupt. He called his sta

> 1. Is a set of data used to assess the degree and strength of a predicted relationship. a. Training data b. Unstructured data c. Structured data d. Test data 2. Data that are organized and reside in a fixed field with a record or a file. Such data are

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