[Mamabear]

Jeff–Is there something wrong with this question? I don’t know the question number because I pressed next before I realized the explanation contradicted the answer.

Under the Secured Transactions Article of the U.C.C., which of the following security agreements does not need to be in writing to be enforceable?

A. A security agreement collateralizing a debt of less than $500

B. A security agreement where the collateral is highly perishable or subject to wide price fluctuations

C. A security agreement where the collateral is in the possession of the secured party

D. A security agreement involving a purchase money security interest

The answer is C. The explanation is When the secured party can take possession of the collateral as part of the security agreement, the agreement is enforceable without writing.

A security agreement collateralizing a debt under $500, where the collateral is in the possession of the secured party, or involving a purchase money security interest (PMSI) must be in writing.

CPA Exam - Finally DONE (November 2014)
BEC (08/10/13) 80
AUD (08/24/13) 65 (11/13/13) 85
FAR (04/12/14) 81
REG (07/19/14) 69 (11/29/14) 87!!

[Mamabear]

I found it–it's #396 if that helps you.

CPA Exam - Finally DONE (November 2014)
BEC (08/10/13) 80
AUD (08/24/13) 65 (11/13/13) 85
FAR (04/12/14) 81
REG (07/19/14) 69 (11/29/14) 87!!

[jeff]

Yes – that does contradict itself…it's a mistake. We need to omit “where the collateral is in the possession of the secured party,”

Requirements of a written security agreement are as follows:

a. It must be “authenticated” by the debtor. This can include traditional signatures as well as “signatures” that are not handwritten on paper. This facilitates the use of electronic security agreements.

b. It must reasonably identify the collateral. Generally, Article 9 types of property (i.e. “inventory”, “accounts”) can be used to identify the collateral.

The agreement must be in writing to be enforced against the debtor and certain third parties unless the secured party has taken possession of the collateral pursuant to an agreement. The agreement must be made so that the person will have possession for purposes of security.

AUD - 79
BEC - 80
FAR - 76
REG - 92

Jeff Elliott, CPA (KS)
NINJA CPA | NINJA CMA | NINJA CPE | Another71

[Mamabear]

Thank you Jeff!

CPA Exam - Finally DONE (November 2014)
BEC (08/10/13) 80
AUD (08/24/13) 65 (11/13/13) 85
FAR (04/12/14) 81
REG (07/19/14) 69 (11/29/14) 87!!

[Author]

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