WGU D216 Business Law for Accountants - Comprehensive Study Guide
(2026/2027)
Chapter 1: The U.S. Legal System and Ethics
1. What is the primary source of law in the United States? - ANSWER ✓ The U.S.
Constitution. It is the supreme law of the land, and all other laws must conform to it.
2. What is statutory law? - ANSWER ✓ Laws enacted by legislative bodies at the federal,
state, or local level (e.g., acts of Congress, state statutes, city ordinances).
3. What is administrative law? - ANSWER ✓ The rules, orders, and decisions of
administrative agencies (e.g., the Securities and Exchange Commission - SEC, the
Internal Revenue Service - IRS).
4. What is common law? - ANSWER ✓ A body of law developed from judicial decisions
(court rulings and precedents), rather than from statutes or constitutions.
5. What is the doctrine of stare decisis? - ANSWER ✓ A Latin phrase meaning "to stand
on decided cases." It is the principle that courts are obligated to follow the precedents
established in prior decisions within the same jurisdiction.
6. What are the three branches of the U.S. government and their primary legal
function? - ANSWER ✓ Legislative (creates statutes), Executive (enforces laws, creates
administrative law), Judicial (interprets laws and reviews their constitutionality).
7. What is the difference between criminal law and civil law? - ANSWER ✓ Criminal law
deals with wrongs against society as a whole, prosecuted by the government, with
penalties of fines or imprisonment. Civil law deals with rights and duties between private
parties, with remedies typically being monetary damages or equitable relief.
8. What is the Sarbanes-Oxley Act (SOX) of 2002 primarily concerned with? -
ANSWER ✓ Corporate accountability, financial disclosure, and the prevention of
accounting fraud. It established the PCAOB and requires CEO/CFO certification of
financial statements.
9. What ethical theory focuses on the consequences of an action to determine its
morality? - ANSWER ✓ Utilitarianism (seeks the greatest good for the greatest number).
10. What is the AICPA's overarching ethical principle for its members? - ANSWER ✓ To
act in the public interest.
Chapter 2: Torts and Strict Liability
11. What is a tort? - ANSWER ✓ A civil wrong, not arising from a contract, that causes
injury or harm, for which the court imposes liability.
12. What are the three main categories of torts? - ANSWER ✓ Intentional torts,
negligence, and strict liability torts.
13. What must a plaintiff prove to establish a claim of negligence? - ANSWER ✓
Duty of care, breach of duty, causation (both actual and proximate), and legally
, recognizable damages.
14. What is the "duty of care" owed by an accountant to a client? - ANSWER ✓ The
duty to perform services with the competence and care of a reasonable, prudent
accountant under similar circumstances.
15. What is the primary defense to a claim of negligence? - ANSWER ✓ Contributory
or comparative negligence (the plaintiff's own negligence contributed to the injury).
16. What is the doctrine of res ipsa loquitur? - ANSWER ✓ "The thing speaks for
itself." It allows negligence to be inferred when the event is of a kind that does not
ordinarily occur without negligence, and the defendant had exclusive control.
17. What is an intentional tort against property? - ANSWER ✓ Trespass to land or
conversion (wrongful taking/using of personal property).
18. What is defamation? - ANSWER ✓ A false statement of fact communicated to a
third party that harms a person's reputation. Libel is written; slander is spoken.
19. Under what theory can an accountant be held liable to a third-party not in
privity of contract? - ANSWER ✓ Under the Restatement (Second) of Torts approach
(foreseeable users rule) or, in some jurisdictions, the Ultramares doctrine (primary
benefit test).
20. What is strict liability? - ANSWER ✓ Liability without fault. It is imposed for
abnormally dangerous activities or for defective products that are unreasonably
dangerous.
Chapter 3: Contract Law - Formation
21. What are the four essential elements of a valid contract? - ANSWER ✓
Agreement (offer and acceptance), consideration, contractual capacity, and legal
purpose.
22. What are the three requirements for a valid offer? - ANSWER ✓ Serious, objective
intent to be bound, definite and certain terms, and communication to the offeree.
23. How can an offer be terminated? - ANSWER ✓ By revocation by the offeror,
rejection by the offeree, counteroffer, lapse of time, destruction of subject matter,
death/incompetency of offeror or offeree, or supervening illegality.
24. What is consideration? - ANSWER ✓ Something of legal value (a promise,
performance, or forbearance) bargained for and given in exchange for a promise.
25. What is the "mailbox rule"? - ANSWER ✓ An acceptance is generally effective upon
dispatch (when placed in the control of the postal service or another authorized means),
provided the proper mode of communication is used.
26. What is the difference between a bilateral and a unilateral contract? - ANSWER
✓ A bilateral contract is a promise for a promise (formed upon exchange of promises). A
unilateral contract is a promise for an act (formed only upon complete performance of
the act).
27. Who lacks contractual capacity? - ANSWER ✓ Minors (can disaffirm), persons
(2026/2027)
Chapter 1: The U.S. Legal System and Ethics
1. What is the primary source of law in the United States? - ANSWER ✓ The U.S.
Constitution. It is the supreme law of the land, and all other laws must conform to it.
2. What is statutory law? - ANSWER ✓ Laws enacted by legislative bodies at the federal,
state, or local level (e.g., acts of Congress, state statutes, city ordinances).
3. What is administrative law? - ANSWER ✓ The rules, orders, and decisions of
administrative agencies (e.g., the Securities and Exchange Commission - SEC, the
Internal Revenue Service - IRS).
4. What is common law? - ANSWER ✓ A body of law developed from judicial decisions
(court rulings and precedents), rather than from statutes or constitutions.
5. What is the doctrine of stare decisis? - ANSWER ✓ A Latin phrase meaning "to stand
on decided cases." It is the principle that courts are obligated to follow the precedents
established in prior decisions within the same jurisdiction.
6. What are the three branches of the U.S. government and their primary legal
function? - ANSWER ✓ Legislative (creates statutes), Executive (enforces laws, creates
administrative law), Judicial (interprets laws and reviews their constitutionality).
7. What is the difference between criminal law and civil law? - ANSWER ✓ Criminal law
deals with wrongs against society as a whole, prosecuted by the government, with
penalties of fines or imprisonment. Civil law deals with rights and duties between private
parties, with remedies typically being monetary damages or equitable relief.
8. What is the Sarbanes-Oxley Act (SOX) of 2002 primarily concerned with? -
ANSWER ✓ Corporate accountability, financial disclosure, and the prevention of
accounting fraud. It established the PCAOB and requires CEO/CFO certification of
financial statements.
9. What ethical theory focuses on the consequences of an action to determine its
morality? - ANSWER ✓ Utilitarianism (seeks the greatest good for the greatest number).
10. What is the AICPA's overarching ethical principle for its members? - ANSWER ✓ To
act in the public interest.
Chapter 2: Torts and Strict Liability
11. What is a tort? - ANSWER ✓ A civil wrong, not arising from a contract, that causes
injury or harm, for which the court imposes liability.
12. What are the three main categories of torts? - ANSWER ✓ Intentional torts,
negligence, and strict liability torts.
13. What must a plaintiff prove to establish a claim of negligence? - ANSWER ✓
Duty of care, breach of duty, causation (both actual and proximate), and legally
, recognizable damages.
14. What is the "duty of care" owed by an accountant to a client? - ANSWER ✓ The
duty to perform services with the competence and care of a reasonable, prudent
accountant under similar circumstances.
15. What is the primary defense to a claim of negligence? - ANSWER ✓ Contributory
or comparative negligence (the plaintiff's own negligence contributed to the injury).
16. What is the doctrine of res ipsa loquitur? - ANSWER ✓ "The thing speaks for
itself." It allows negligence to be inferred when the event is of a kind that does not
ordinarily occur without negligence, and the defendant had exclusive control.
17. What is an intentional tort against property? - ANSWER ✓ Trespass to land or
conversion (wrongful taking/using of personal property).
18. What is defamation? - ANSWER ✓ A false statement of fact communicated to a
third party that harms a person's reputation. Libel is written; slander is spoken.
19. Under what theory can an accountant be held liable to a third-party not in
privity of contract? - ANSWER ✓ Under the Restatement (Second) of Torts approach
(foreseeable users rule) or, in some jurisdictions, the Ultramares doctrine (primary
benefit test).
20. What is strict liability? - ANSWER ✓ Liability without fault. It is imposed for
abnormally dangerous activities or for defective products that are unreasonably
dangerous.
Chapter 3: Contract Law - Formation
21. What are the four essential elements of a valid contract? - ANSWER ✓
Agreement (offer and acceptance), consideration, contractual capacity, and legal
purpose.
22. What are the three requirements for a valid offer? - ANSWER ✓ Serious, objective
intent to be bound, definite and certain terms, and communication to the offeree.
23. How can an offer be terminated? - ANSWER ✓ By revocation by the offeror,
rejection by the offeree, counteroffer, lapse of time, destruction of subject matter,
death/incompetency of offeror or offeree, or supervening illegality.
24. What is consideration? - ANSWER ✓ Something of legal value (a promise,
performance, or forbearance) bargained for and given in exchange for a promise.
25. What is the "mailbox rule"? - ANSWER ✓ An acceptance is generally effective upon
dispatch (when placed in the control of the postal service or another authorized means),
provided the proper mode of communication is used.
26. What is the difference between a bilateral and a unilateral contract? - ANSWER
✓ A bilateral contract is a promise for a promise (formed upon exchange of promises). A
unilateral contract is a promise for an act (formed only upon complete performance of
the act).
27. Who lacks contractual capacity? - ANSWER ✓ Minors (can disaffirm), persons
