CPA REG Debtor-Creditor & Federal Laws Practice Questions
Debtor-Creditor & Federal Laws makes up 3 of every 50 questions on a Tigertest CPA REG practice test. Here are 10 of the 12 questions on it, each with the answer and the reason.
Updated by the Tigertest team. Based on the AICPA's 2026 REG blueprint. Original multiple-choice questions; 50 per test, weighted like the real section's five areas, 75% target. Not affiliated with the AICPA or NASBA.
1. Under UCC Article 9, a security interest attaches when value is given, the debtor has rights in the collateral, and:
- A.The debt becomes past due
- B.There is a security agreement
- C.A financing statement is filed
- D.The debtor is notified in writing
Answer: B. Attachment needs value, the debtor's rights in the collateral and a signed (authenticated) security agreement (or the creditor's possession). Filing is a way to perfect, not to attach.
2. A store sells a TV on credit to a consumer for home use and keeps a purchase-money security interest. The interest is perfected:
- A.When the store keeps the TV
- B.Twenty days after the sale
- C.Only on filing
- D.Automatically on attachment
Answer: D. A purchase-money security interest in consumer goods is perfected automatically when it attaches, with no filing needed.
3. A buyer in the ordinary course of business buys inventory from a dealer whose lender has a perfected security interest in it. The buyer takes the goods:
- A.Free of the security interest
- B.Free only after paying the lender
- C.Subject to the security interest
- D.Subject to it if they knew of it
Answer: A. A buyer in the ordinary course takes free of a security interest created by the seller, even a perfected one the buyer knows about.
4. Two lenders take security interests in the same equipment. Lender A files first; Lender B's interest attaches first. Both are perfected. Who has priority?
- A.They share it pro rata
- B.Whoever lent money first
- C.Lender A, the first to file
- D.Lender B, the first to attach
Answer: C. Between perfected security interests, priority goes to the first to file or perfect. Attachment order does not decide priority.
5. A surety pays the creditor in full after the debtor defaults. The surety's right to take over the creditor's rights against the debtor is:
- A.Contribution
- B.Reimbursement
- C.Subrogation
- D.Exoneration
Answer: C. Subrogation puts the paying surety in the creditor's shoes, including any collateral. Reimbursement is the separate right to be repaid by the debtor.
6. Two co-sureties each guaranteed the same loan in full. One pays the whole debt. Her right to collect a share from the other is:
- A.Contribution
- B.Exoneration
- C.Indemnity
- D.Subrogation
Answer: A. Contribution lets a co-surety who pays more than her share recover the excess from the other co-sureties, in proportion to their guarantees.
7. A debtor, insolvent, pays an unsecured, unrelated creditor on an old debt 60 days before filing Chapter 7. The trustee can generally:
- A.Recover it only after a year
- B.Not recover a paid debt
- C.Recover it only on proof of fraud
- D.Recover it as a preference
Answer: D. Transfers to an unsecured creditor for an old debt within 90 days of filing while insolvent are avoidable preferences. The period is one year for insiders.
8. In a Chapter 7 case, which unsecured claim has the highest priority?
- A.General trade creditors
- B.Domestic support obligations
- C.Employee wage claims
- D.Recent income taxes
Answer: B. Since the 2005 Act, domestic support obligations rank first among priority unsecured claims, ahead of wages and taxes. General unsecured creditors share what is left.
9. Which debt is generally NOT discharged in a Chapter 7 bankruptcy?
- A.Unsecured personal loans
- B.Unpaid child support
- C.Credit card balances
- D.Unpaid medical bills
Answer: B. Domestic support obligations such as child support are never discharged. Ordinary consumer debts like credit cards and medical bills are.
10. Under the IRS common law test, behavioral control looks at whether the business controls:
- A.Whether the worker profits
- B.How long the job lasts
- C.Who buys the materials
- D.How the work is done
Answer: D. Behavioral control asks whether the business directs how, when and where the work is done. Who pays for materials and the chance of profit are financial control factors.
Practice all 12 debtor-creditor & federal laws questions, and the rest of the 200-question bank, in the free CPA REG training sets. Questions you miss come back until you have mastered them.
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