Unit quiz: Reading what decides the deal: statutory disclosure items, contract clauses, public filings, tax-basis statements and conditional offers

Check understanding, separately from reading

5 questions · 80% to pass · no timer. This quiz checks the lessons in this unit. These authored questions assess recognition and application of the taught distinctions, not professional qualification. You may review the lessons and retry. Repeat attempts reuse the question bank; a remembered answer is not proof of transfer to a new situation.

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Question 1

A provider sends a merchant in a state whose list you have not read a disclosure with five numbered lines. You have previously audited offers in another state whose list has six. Before saying anything to the merchant, what is the correct first move, and what will you count?Fetch the current numbered list from the governing state's disclosure section, count the items there, and audit the document against that list, noting which rows are conditional and which are due at the offer; a five-line document cannot be scored against a six-item list from a different state.Audit the five lines against the six-item list you already know, mark the missing item as a defect, and tell the merchant the offer is incomplete pending that line.

Question 2

A merchant asks whether the annualized rate printed on a disclosure from a disclosure-law state is the same thing as an APR, and whether you can therefore quote a comparable annual figure for a factor-based advance alongside it.Yes, both are annualised cost measures, so the advisor can convert the factor into an equivalent annual rate and present the two figures side by side for comparison.No: a statutory annualized rate is a defined disclosure term produced under that state's method, an APR is a different construct from a different regime with its own rules, and a factor is a multiplier applied to an advance rather than a rate; the honest answer describes the disclosed figure as what the statute requires and refuses to convert the factor into an annual figure.

Question 3

A contract allows prepayment and states the total repayment amount, and it says nothing further about early payoff. The merchant plans to finish in week 10 of 24 on a $48,000 advance at a factor of 1.34 and expects to save the unearned portion. Write the correct read.Silence about prepayment means the scheduled remaining balance is owed, so the payoff at week 10 is the $37,520.00 remaining of the $64,320.00 total, and the early finish saves time rather than dollars; state both the balance and the weeks removed, and note that a discount or penalty clause would change the figure.Prepaying saves the finance charge that has not yet been earned, so the advisor should prorate the $16,320.00 of cost over the unused 14 weeks and quote a payoff of about the principal remaining.

Question 4

A folder for a merchant contains a financing statement filed 2019-08-02 covering all assets, a search dated today showing no continuation, a filing from 2024 covering inventory, and a bankruptcy petition filed four days ago by the business. The merchant wants to know whether the funder can still collect this week and whether the business is unencumbered. Write the two answers.The business is unencumbered because the blanket filing lapsed with no continuation, and the funder can keep collecting because the contract signed by the merchant authorises the debits.Collection is barred as to collection acts because a petition operates as a stay applicable to all entities and reaches acts to collect a pre-petition claim, so the funder's scheduled debit is a collection act regardless of the contract; and the business is not shown to be unencumbered, because the 2019-08-02 all-assets filing lapsed on 2024-08-02 unless continued within the window that closed on that date, which addresses UCC priority rather than the amount owed.

Question 5

A merchant supplies a cash-method return showing $96,400 of net profit, a bank statement showing $468,000 of deposits, and a note that $58,000 of December invoices were collected in January. He asks how much weekly payment the business can carry. What must the advisor produce before answering, and what are the key figures?A reconciliation and a cash rebuild: $412,000 of receipts plus $40,000 of loan proceeds plus $9,500 of owner contribution plus $6,500 of returned deposit equals $468,000 of deposits exactly; and $96,400 plus $14,800 of depreciation minus $62,400 of principal payments minus $48,000 of owner draws equals $800.00 of free cash, with the $58,000 of December receipts and any section 481(a) amount listed separately as timing facts.Use the $468,000 of deposits as the revenue base, subtract the merchant's stated monthly expenses, and treat the remaining margin as capacity, since deposits are the cash the business actually handled.

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