Business Law for Accountants
Practice Questions
Course Introduction
Business Law for Accountants introduces students to the fundamental principles of law that impact the practice of accounting. The course covers essential topics such as the legal environment of business, contracts, the Uniform Commercial Code, agency relationships, business organizations, property law, and the regulatory frameworks affecting accountants. Emphasis is placed on understanding legal concepts relevant to professional ethics, liability, and compliance, as well as the practical application of law in preparing, analyzing, and auditing financial statements. This foundation equips aspiring accountants with the essential legal knowledge necessary to navigate the complexities of modern business environments and uphold professional standards.
Recommended Textbook
Business Law Text and Cases Commercial Law for Accountants 14th Edition by Roger LeRoy Miller
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Chapter 1: Business Ethics
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Q1) Precision Engineering Inc., like other corporations, is subject to laws that are broad in their purpose and their scope. Compliance with these laws is not always sufficient to determine "right" behavior because
A) the law does not codify all ethical requirements.
B) company codes are also sources of law.
C) business decisions can have negative impacts.
D) ethical problems occur in business.
Answer: A
Q2) Flexo Trucking Company transports hazardous waste. Garn is a Flexo driver, whom the company knows drives longer hours than federal regulations permit. One night, Garn exceeds the limit and has an accident. Spilled chemicals contaminate Hill City's water source, forcing the residents to move away. Flexo acted unethically because
A) Flexo showed reckless disregard for Hill City's residents and others.
B) Garn exceeded the federal time limit.
C) harm was caused by an unfortunate accident.
D) Hill City should have better protected its water source.
Answer: A
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Chapter 2: Small Businesses and Franchises
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Q1) Gary buys from Hook, Line & Sinker Corporation the exclusive right to sell its trademarked fishing gear in a certain area. Their franchise agreement requires Gary to pay certain administrative expenses. Their agreement may also require the franchisee to pay a percentage of the franchisor's
A) advertising costs.
B) personal expenses.
C) retirement income.
D) all of the choices.
Answer: A
Q2) Refer to Fact Pattern 2-1.To potential investors, Jumbo Juice must disclose A) the range of goods and services included.
B) the value of the franchise.
C) the estimated profitability of the franchise.
D) all of the choices.
Answer: D
Q3) The law considers all new businesses to be sole proprietorships regardless of the number of owners.
A)True
B)False
Answer: False
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Chapter 3: All Forms of Partnerships
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Q1) Delany and Efron want to form a limited partnership to do general business bookkeeping with an emphasis on tax accounting. In most states, a limited partnership will be created when Delaney and Efron
A) file a certificate of limited partnership.
B) execute a partnership agreement.
C) accept their first client.
D) make their capital contributions.
Answer: A
Q2) Smith & Jones, Accountants, is a limited liability partnership (LLP). The major features of an LLP are that it limits the personal liability of the partners and A) it allows the partnership to continue as a pass-through tax entity.
B) LLP statutes do not vary from state to state.
C) it can only do business in the state in which it was formed.
D) only a few states have enacted LLP statutes.
Answer: A
Q3) A partner may not have the right to dissociate from the partnership.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Limited Liability Companies and Special Business Forms
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Q1) ost states apply to a limited liability company (LLC) formed in another state the law of the state where the LLC currently does business.
A)True
B)False
Q2) Tax Accounting, LLC, is a member-managed limited liability company. If the law in Tax Accounting's state is like the law in most states, unless the members have agreed otherwise, voting rights are apportioned according to
A) capital contributions.
B) participation in management.
C) the number of members.
D) members' seniority.
Q3) Lauren, Maria, and Nina form a syndicate to buy a professional soccer franchise. This syndicate could be set up as
A) a joint venture.
B) a corporation.
C) a sole proprietorship.
D) a limited liability company.
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Page 6
Chapter 5: Corporate Formation and Financing
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Q1) The articles of incorporation serve as a primary source of authority for a corporation's business operations.
A)True
B)False
Q2) A corporation possesses the same right of access to the courts as a citizen.
A)True
B)False
Q3) The state can dissolve a corporation for failing to pay taxes.
A)True
B)False
Q4) A court will not pierce the corporate veil of a corporation simply because it is too thinly capitalized.
A)True
B)False
Q5) Stocks represent the borrowing of funds by firms.
A)True
B)False
Q6) A corporation cannot be formed for purposes other than making a profit. A)True
B)False
Page 7
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Chapter 6: Corporate Directors, Officers, and Shareholders
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Q1) Most states do not allow directors to participate in board of directors' meetings from remote locations.
A)True
B)False
Q2) The articles of incorporation can exclude or limit shareholders' voting rights.
A)True
B)False
Q3) Many states permit a corporate board to have fewer than three directors.
A)True
B)False
Q4) Charlie, Dora, and Ethel are the first directors on the board of Face Time Corporation, a social media host. Subsequent directors are elected by a majority vote of Face Time's A) users.
B) employees.
C) officers.
D) shareholders.
Q5) A director or officer must act in good faith. A)True
B)False
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Chapter 7: Securities Law and Corporate Governance
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Q1) Beachware, Inc., wants to issue stock of $4 million in a single offering. The corporation must provide disclosure documents that generally are the same as those used in registered offerings to A) all investors and the Securities and Exchange Commission.
B) the Securities and Exchange Commission.
C) any accredited investors.
D) any unaccredited investors.
Q2) As part of a stock offering for Design Studio Corporation, the firm's accountant Eve intentionally misrepresents material facts in the prospectus. Fred buys the stock unaware of the misrepresentation and suffers a loss. Eve may be subject to A) none of the choices.
B) job termination but no other sanctions, penalties, or liability.
C) a fine, imprisonment, and damages.
D) professional censure but no criminal sanctions or civil liability.
Q3) An insider must actually use inside information in connection with the purchase and sale of securities to violate Section 16(b) of the Securities Exchange Act of 1934.
A)True
B)False
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Chapter 8: Tort Law
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Q1) Precision Craft, Inc., makes tools. While using a Precision tool to replace an electrical fixture, Stan neglects to shut off the power and is electrocuted. Stan's heirs file a suit against Precision. In a contributory negligence jurisdiction, the plaintiffs could recover A) only if both parties were equally at fault.
B) only if Stan was less than 50 percent at fault.
C) only if Precision was more than 51 percent at fault.
D) nothing.
Q2) A person assumes all risks associated with any activity in which he or she participates.
A)True
B)False
Q3) Under the theory of negligence, the duty of care requires an intentional act.
A)True
B)False
Q4) Unintentionally causing a party to break a contract may constitute wrongful interference with a contractual relationship.
A)True
B)False
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Chapter 9: Agency Formation and Duties
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Q1) Jewelry & Coin Company hires Kelly Ann to buy gems and precious metals from various sources on its behalf. In this relationship, Jewelry & Coin is
A) an employee.
B) an independent contractor.
C) a principal.
D) an agent.
Q2) Lorena is appointed as an agent for Milled Grains, Inc. The agency agreement is silent as to the level of sales that Lorena is expected to achieve. She must
A) achieve nothing because the agreement says nothing on the issue.
B) attain the level that Lorena achieved with her previous employer.
C) maintain the level Milled Grains attained before Lorena became an agent.
D) use reasonable diligence and skill in selling.
Q3) An agency relationship created for an illegal purpose is enforceable.
A)True
B)False
Q4) An agent is not authorized to act instead of a principal in doing business with third parties.
A)True
B)False
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Chapter 10: Agency Liability and Termination
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Q1) An undisclosed principal is not liable to a third party for a contract made by an agent.
A)True
B)False
Q2) Rod is an employee of Savers Bank. In deciding whether Rod acts within the scope of his employment when he commits a tort against Tracy, a court will not consider whether A) Rod indicated that he was acting on behalf of Savers Bank.
B) Savers Bank authorized the act.
C) Savers Bank furnished the means by which the injury was inflicted.
D) the act is one commonly performed by employees for their employers.
Q3) Darla serves in a representative capacity for Ellen. To accomplish the objectives of this relationship, Darla's authority can be implied
A) by contradiction.
B) by custom.
C) by any subjective measure.
D) under no circumstances.
Q4) An agency can terminate once its purpose is achieved.
A)True
B)False
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Chapter 11: Employment, Immigration, and Labor Law
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Q1) During collective bargaining, the employer and the union are obligated to reach an agreement.
A)True
B)False
Q2) Workhorse Air Crane Corporation employs aircraft mechanics, computer programmers, outside salespersons, and professionals, including pilots. Employees exempt from the Fair Labor Standards Act's overtime provisions include all of the following except
A) aircraft mechanics.
B) computer programmers.
C) outside salespersons.
D) professionals.
Q3) An employee who discloses information relating to fraud perpetrated by his or her employer against the government is protected from retaliatory discharge under federal and state statutes.
A)True
B)False
Q4) Children under fourteen years of age are not allowed to work.
A)True
B)False
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Chapter 12: Employment Discrimination
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Q1) Ellen and Fred work on the loading dock for Grange Storage. Ellen, who has a disability, requests a transfer, which would represent an accommodation for her disability. But when an opening occurs, Grange transfers Fred on the basis of seniority. In Ellen's suit against Grange for discrimination, most likely
A) Fred's seniority is a good defense.
B) Ellen's disability is a sufficient basis for relief.
C) Grange's action was a business necessity.
D) Grange's action was a reasonable accommodation.
Q2) Deep Sea Fishing Corporation meets all of the requirements to be subject to the federal employment discrimination laws. These laws restrict the ability of employers to discriminate against workers on the basis of A) experience.
B) gender.
C) intelligence.
D) skill.
Q3) Intentional discrimination by an employer against an employee is known as disparate-impact discrimination.
A)True
B)False
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Page 14
Chapter 13: The Formation of Sales and Lease Contracts
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Q1) Fresh Dairy, Inc., is the offeror and Gelato Ice Cream Company is the offeree under a unilateral sales contract in which Hector's Helado Corporation is also interested. Gelato is not notified of Fresh Dairy's performance within a reasonable time. Gelato A) may treat the offer as having lapsed.
B) must assume that Fresh Dairy has started to perform.
C) must contact Fresh Dairy.
D) must notify Hector's.
Q2) Marine Expeditions, Inc., pays Nate's Boats $4,000 to use an oceangoing vessel for a month. For the purposes of the UCC, this is
A) a merchant's firm offer.
B) an option contract.
C) a lease.
D) a sale.
Q3) Under the UCC, an offeree can accept an offer to buy goods by a prompt shipment of conforming goods.
A)True
B)False
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Chapter 14: Performance and Breach of Sales and Lease Contracts
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Q1) Game Source Stores are open to consumers. The UCC requirement of good faith imposes
A) a higher duty on consumers than Game Source.
B) a higher duty on Game Source than on consumers.
C) no duty on either Game Source or consumers.
D) the same duty on Game Source and consumers.
Q2) Precious Stones, Inc., and Sparkling Jewelry stores enter into a contract for a sale of gemstones. Precious Stones does not deliver. The buyer can normally recover as damages the difference between
A) any loss avoided and any profit gained.
B) the actual price and the hoped-for price.
C) the contract price and the market price.
D) the current prices in the parties' locations.
Q3) Pine Mills Inc. and Quality Lumber Company enter into a contract for a sale of plywood to be delivered under a destination contract. This contract requires Pine Mills, the seller, to
A) allow the buyer to reject the goods for any reason.
B) deliver the goods to a particular destination.
C) inspect the goods before tendering their delivery.
D) place the goods into the hands of a carrier.
Page 16
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Chapter 15: Negotiable Instruments
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Q1) Gail owes $5,000 in unpaid taxes. Using the back of an old t-shirt, she executes an instrument for $5,000 that otherwise meets the requirements for negotiability. This instrument is likely A) negotiable.
B) nonnegotiable, because an instrument must be on paper.
C) nonnegotiable, because a t-shirt is not sufficiently permanent.
D) nonnegotiable, because the government does not appreciate it.
Q2) On a cashier's check, the bank is the drawer.
A)True
B)False
Q3) Jane signs an instrument using a "J" with a swirl around it. With this mark for a signature, the instrument is A) negotiable.
B) not negotiable, because an initial is not state the signer's name.
C) not negotiable, because an initial is not a signature.
D) not negotiable, because an initial is not an indication of serious intent.
Q4) The most common type of draft is a check.
A)True
B)False
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Chapter 16: Transferability and Holder in Due Course
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Q1) An indorser who does not wish to be liable on an instrument can use a qualified indorsement.
A)True
B)False
Q2) Refer to Fact Pattern 16-1.When Patricia writes "Pay to Patricia" above Nina's signature, Nina's signature becomes
A) a blank indorsement.
B) a qualified indorsement.
C) a special indorsement.
D) a forgery.
Q3) Refer to Fact Pattern 16-1.By writing "Pay to Patricia" above Nina's signature, Patricia
A) avoids the risk of loss from theft of the instrument.
B) relieves himself from liability on the instrument.
C) converts a legitimate negotiable instrument into a stolen instrument.
D) locks the instrument into the bank collection process.
Q4) To avoid the risk of loss from theft, a holder may convert a blank indorsement to a special indorsement.
A)True
B)False
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Chapter 17: Liability, Defenses, and Discharge
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Q1) Refer to Fact Pattern 17-1.Suppose that Select Holdings pays Global Bank on the note. With timely notice to the proper parties, Select Holdings may then collect payment on the note from
A) Chuck, Investors, or Equity Lenders.
B) Chuck or Investors only.
C) Equity Lenders only.
D) no one.
Q2) Celine issues a note "payable to the order of Celine," forges Dash's signature as the maker, and indorses the note "pay to Erica." Celine sells the note to Erica, who negotiates it by indorsement and delivery to Forest. Forest can extend liability to A) no one.
B) Celine.
C) Dash.
D) all of the parties.
Q3) Warranty liability arises only from a transferor's signature.
A)True
B)False
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Chapter 18: Banking in the Digital Age
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Q1) State Bank agrees to accept a check by setting aside sufficient funds to cover the amount. This check is considered
A) cashed.
B) certified.
C) deposited.
D) a provisional credit.
Q2) On Monday, Ellery deposits in her account at Fiscal Bank a local check for $500. After 5:00 p.m. on Friday, from these funds, Ellery can withdraw no more than
A) $100.
B) $400.
C) $500.
D) $600.
Q3) When a bank pays a check on which the drawer's signature is forged, generally the customer suffers the loss.
A)True
B)False
Q4) A written stop payment order is only valid for thirty days.
A)True
B)False
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Chapter 19: Creditors Rights and Remedies
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Q1) A surety cannot assert the principal debtor's bankruptcy as a defense to avoid liability on the debtor's obligation.
A)True
B)False
Q2) Refer to Fact Pattern 19-1.If Tina signs the application only after language is included that requires Petro to exhaust its legal remedies against Slick before looking to her, then Tina is
A) a surety.
B) a lienor.
C) a guarantor.
D) a creditor.
Q3) Ronaldo's debt to Sofia is past due. Ronaldo obtains a judgment against Sofia to collect the debt, but Sofia will not pay. Ronaldo requests a writ of execution. The property that is seized under the writ of execution must be
A) in Ronaldo's possession.
B) in Sofia's possession.
C) in the possession of Sofia's employer or other third party.
D) within the court's geographic jurisdiction.
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Chapter 20: Secured Transactions
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Q1) AAA Loans, Inc., holds a security interest in kitchen and restaurant equipment owned by Brunch n' Lunch Bistro. AAA assigns its interest in the equipment to Commercial Investments Corporation. Commercial Investments becomes the secured party of record
A) automatically.
B) if AAA advises Brunch n' Lunch of the assignment.
C) if Commercial Investments advises Brunch n' Lunch of the assignment.
D) if Commercial Investments files a uniform amendment form.
Q2) A security interest that provides for a security interest in collateral subject to future advances is a floating lien.
A)True
B)False
Q3) Kyla holds a security interest in inventory owned by Luc. Kyla protects her claim to the inventory in the event of Luc's default by A) assignment.
B) perfection.
C) redemption.
D) retention.
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22
Chapter 21: Bankruptcy Law
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Q1) Payments under aChapter 13 plan must be completed within three to five years, depending on the debtor's family income.
A)True
B)False
Q2) Daniel is a trustee for a federal bankruptcy court. Daniel's duties include
A) collecting the debtor's available estate.
B) establishing priority for the payment of unsecured creditors.
C) operating a debtor's business to obtain maximum profit for creditors.
D) submitting to an examination under oath by the creditors.
Q3) A repayment plan case can be initiated by the conversion of a liquidation petition.
A)True
B)False
Q4) Teri files a petition for bankruptcy. Her creditors must file with the court their proof of claims against her assets within
A) fifteen days of the order for relief.
B) thirty days of the filing of the petition.
C) sixty days of the automatic stay.
D) ninety days of the creditors' meeting.
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23
Chapter 22: Professional Liability and Accountability
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Q1) Attorneys are required to find relevant law that is applicable to a case and can be discovered through a reasonable amount of research.
A)True
B)False
Q2) Under rules of professional conduct, state authorities can discipline professionals for misconduct.
A)True B)False
Q3) Delaney is an accountant charged with negligence by Estimation & Valuation Services Inc., a client. Delaney may successfully defend against the claim if he can show that
A) scienter was lacking.
B) he complied with all International Financial Reporting Standards.
C) the negligence was not the proximate cause of the client's losses.
D) the negligence was only contributory.
Q4) In some states, in the absence of privity, a party cannot recover from an accountant for negligence.
A)True B)False
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Chapter 23: Administrative Agencies
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Q1) Administrative agencies create their own enabling legislation.
A)True
B)False
Q2) Maya seeks information about well-known businesspersons under the Freedom of Information Act. To obtain the information, Maya must
A) agree not to reveal any trade secrets.
B) reasonably describe the information.
C) get a court order.
D) have the subjects' permission.
Q3) A subpoena ad testificandum is an order to an individual or organization to hand over certain records, papers, or books.
A)True
B)False
Q4) Executive control over the Federal Communications Commission, and other agencies, may be exercised through the president's power to A) appoint agency officers.
B) veto the agency's final rules.
C) veto the agency's final orders.
D) promulgate enabling legislation.
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Chapter 24: Consumer Law
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Q1) Counteradvertising occurs when a salesperson lures a consumer into a store by advertising a low-priced item in order to switch the consumer to a more expensive item.
A)True
B)False
Q2) Hearth & Home Furniture store advertises bedroom suites at a "Special Low Price of $599." When Ilene tries to buy one of the suites, Jill, the salesperson, tells her that they are all sold and no more are obtainable. Jill adds that Hearth & Home has other bedroom suites available for as low as $2,599. This is
A) a cease-and-desist order.
B) bait-and-switch advertising.
C) counteradvertising.
D) puffery.
Q3) Credit can be denied if a person receives a certain form of income. A)True B)False
Q4) Vague generalities are permissible in advertising.
A)True
B)False
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Chapter 25: Environmental Protection
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Q1) It is a violation of federal law to destroy or deface any labeling required on a pesticide or herbicide.
A)True
B)False
Q2) The Environmental Protection Agency has concluded that greenhouse gases, including CO2 emissions, do not constitute a public danger.
A)True
B)False
Q3) County Water District operates a public water supply system. The district must send to every household that it supplies with water an annual statement describing
A) the district's financial situation and material facts that might affect it.
B) other operations, such as irrigation and water conservation, in which the district is involved and to what extent.
C) parties who might be held liable if pollution problems arise.
D) the source of the water, and any contaminants and health concerns.
Q4) Cities and counties may impose rules regulating methods of wastes removal.
A)True
B)False
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Chapter 26: Antitrust Law
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Q1) Frozen Confections Corporation makes and sells ice cream under a variety of brand names. Frozen Fruit wants to merge with Grocers Iced Products Company, its main competitor. In weighing a challenge to the deal, a court looks at the relevant product market. This most likely includes ice cream and A) no other products.
B) products that are not identical but are related, such as spin-offs.
C) products that are reasonably interchangeable.
D) products with identical attributes only.
Q2) To drive its competitors out of a certain geographic segment of its market, Drones, Inc., sets the prices of its products below cost for the buyers in that area. This is A) price-fixing.
B) smart marketing.
C) predatory pricing.
D) price discrimination.
Q3) The Clayton Act prohibits price discrimination.
A)True
B)False
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28
Chapter 27: Personal Property and Bailments
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Q1) What is required to transfer or acquire property is determined by whether the property is classified as tangible or intangible.
A)True
B)False
Q2) Lauren owns a 1967 Ford Mustang, which Mike customizes and details to Lauren's specifications. The car earns several awards at regional vehicle customizing competition shows. The result of Mike's efforts is
A) accession.
B) acquisition.
C) conversion.
D) a bailment.
Q3) Emily checks her luggage at Flyaway Airlines's ticket counter before boarding her flight to Houston. Subject to a bailment is
A) Emily.
B) Emily's luggage.
C) Emily's ticketed seat on the flight.
D) none of the choices.
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29
Chapter 28: Real Property and Landlord-Tenant Law
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Q1) Frank owns GuestHouse Hotel. His ownership rights include the right to sell or give away the property without restriction, as well as the right to commit waste, if he chooses. Frank's ownership interest is
A) a fee simple absolute.
B) a profit.
C) a life estate.
D) the power of eminent domain.
Q2) Meadowland, Inc., owns rural property that it leases to various tenants, including Norm. Norm's transfer of his entire interest in the leased property to Orly is
A) an assignment.
B) constructive eviction.
C) an easement.
D) a sublease.
Q3) Ernie, the owner of Fallow Farm, sells Gus a right to park his RV on Fallow land overnight. Gus's right is
A) a fee simple absolute.
B) a license.
C) an easement.
D) a profit.
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Chapter 29: Intellectual Property
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Q1) Hua plots a new Iron Man adventure and carefully and skillfully imitates the art of Marvel Comics to create an authentic-looking Iron Man graphic novel. Hua is not affiliated with the owners of the copyright to Iron Man. Can Hua publish the novel as his own work without infringing on the owners' copyright?
Q2) With a few exceptions, almost anything is patentable.
A)True
B)False
Q3) Reprise, Inc., a U.S. video production company, files a suit against Substantivo TV, Ltd., a Mexican production firm, for infringement of intellectual property rights under Mexico's national laws. Under the TRIPS agreement, Reprise is entitled to receive
A) better treatment than Substantivo.
B) the same treatment as Substantivo.
C) worse treatment than Substantivo.
D) nothing.
Q4) By using another's trademark, a business could lead consumers to believe that its goods were made by the other business.
A)True
B)False
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Page 31
Chapter 30: Insurance
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Q1) Vanessa obtains a life insurance policy with no cash surrender value and names her son Winthorp as the beneficiary. This is
A) whole life insurance.
B) limited-payment life insurance.
C) universal life insurance.
D) term insurance.
Q2) Alain and Bette are partners who own and operate Cakes n' Pies, a chain of dessert restaurants. Their partnership obtains insurance on Alain and Bette's lives. This is
A) disability insurance.
B) all-risk insurance.
C) key-person insurance.
D) liability insurance.
Q3) An applicant for an insurance policy is called an underwriter. A)True
B)False
Q4) A life insurance policy is not binding until the insured dies.
A)True
B)False
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Chapter 31: Wills and Trusts
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Q1) A codicil is a clause in a will affirming an administrator's testamentary capacity.
A)True
B)False
Q2) Before dying from injuries suffered in an accident, Lynda tells her cousin Marina that on her death, Natalia is to be given possession of Lynda's farm. In most states, this oral "will" would be
A) not permitted.
B) permitted but not probated.
C) valid only because its witness is not its beneficiary.
D) valid only because it does not involve a transfer of personal property.
Q3) Martin's will states, "I leave my gold pocket watch to Laurie." Laurie dies before Martin. This creates
A) an abatement.
B) a general devise.
C) a lapsed legacy.
D) a residuary legacy.
Q4) A divorce necessarily revokes an entire will.
A)True
B)False
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Chapter 32: Digital Update:should Employees Have a Right of Disconnecting
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Q1) Predictive analytics in the digital realm focuses on
A) predicting certain behavior based on certain data.
B) analyzing certain data to predict digital developments.
C) analyzing certain predictions to monitor certain results.
D) predicting certain digital data based on reasoned analysis.
Q2) Beth starts Checklist to market a new app. Valley Credit Union loans $30,000 to Beth for the project. Later, the debt is most likely to be discharged in bankruptcy
A) if Beth provides a complete, accurate record of business transactions.
B) if the loan is not subject to an agreement that imposes personal liability.
C) if Beth's business is a sole proprietorship.
D) under no circumstances.
Q3) Like other online businesses, Amazing.com collects and retains its customers' account numbers and other personal information. Keeping this data private will most likely
A) protect against liability for wrongful disclosure or misuse.
B) comply with federal and state laws that also cover offline businesses.
C) meet the standards of foreign countries' privacy laws.
D) all of the choices.
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Chapter 33: Digital Update: Revenge Porn and Invasion of Privacy
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Q1) Hank and Ida take photos of themselves in intimate moments. When their relationships ends, Hank posts the photos online without Ida's consent in an attempt to humiliate her. This is a crime in
A) a handful of states.
B) all states.
C) most states.
D) no state.
Q2) Clear Coding Inc. provides its employees personal breaks of up to twenty minutes per break. Under the Fair Labor Standards Act, Clear must
A) compensate its employees during their breaks.
B) not compensate its employees during their breaks.
C) record the breaks for review by the U.S. Department of Labor.
D) record and report the breaks to the U.S. Department of Labor.
Q3) Under the Patient Protection and Affordable Care Act, a health insurance company can increase an employer's premium
A) if an employee files a claim.
B) as an employee gets older.
C) when the employer hires a woman.
D) none of the choices.
Page 35
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Chapter 34: Digital Update: Taxing Web Purchases
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Q1) Rita borrows $20,000 from the U.S. Department of Education to help pay for her education at State University. She signs a note payable to DOE for the amount of the loan plus interest. The loan may be discharged if
A) Rita does not graduate from State University within six years of the loan.
B) in bankruptcy, repayment would cause Rita undue hardship. C) any of the choices.
Q2) Online retailers that have a physical presence within a state must collect state taxes on any Web sales made to residents of that state. Sell2U.com, Inc., an online retailer based in California, pays Tracker Web Services, which is located within New York, to direct traffic to Sell2U.com's site. If Sell2U.com must collect and remit taxes on its sales to New York residents, it is most likely because
A) Sell2U.com's deal with Tracker falls within New York's definition of physical presence.
B) Congress has explicitly chosen to tax Internet sales.
C) the United States Supreme Court has ruled that a state can compel an out-of-state business to collect and remit state taxes.
D) New York requires its residents to self-report their purchases and pay use taxes to the state.
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Sample Questions
Q1) The Federal Communications Commission issued proposed rules regulating Internet service providers (ISPs) as "common carriers" under the Communications Act of 1934. Under these rules, ISPs cannot
A) prevent users from accessing "legal content" on the Internet.
B) reduce the speed of data from any particular site or application.
C) charge content providers more for faster service.
D) all of the choices.
Q2) Advertising generally is required to be accompanied by certain disclosures. According to Federal Trade Commission guidelines, disclosures accompanying native ads should
A) not be where consumers will notice them.
B) not be above or before the native ad.
C) not be as close as possible to where consumers look first.
D) stand out.
Q3) To reduce the emission of greenhouse gases, power companies are required to save specified amounts of energy by
A) all of the states.
B) less than half of the states.
C) more than half of the states.
D) none of the states.
Page 37
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Chapter 36: Digital Update:the Exploding World of Digital Property
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Q1) Pay-to-Buy.com, Inc. obtains a patent on an online payment system. The patent is vaguely worded and overly broad. In evaluating the patent, a court is most likely to A) have difficulty, resulting in Pay-to-Buy being targeted by patent trolls.
B) apply the patent broadly.
C) issue a vaguely worded protection order.
D) hold that Pay-to-Buy's business practices are illegal.
Q2) According to the United States Supreme Court,
A) Metro City can take a parking lot for a privately owned sports stadium.
B) all of the choices.
C) Laborville can condemn a vacant field for a private manufacturing plant.
D) Sleepyton can take residential property for a private corporate complex.
Q3) Carrie starts Dance & Diet Nutrition, a weight-loss products enterprise, before marrying Edgar. To legitimat4ely protect Carrie's business assets from Edgar's claims if the spouses divorce, Carrie could use
A) a prenuptial agreement preceded by fully disclosing the business assets.
B) a postnuptial agreement without fully disclosing the business assets.
C) conceal the business assets.
D) all of the choices.
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