Business Organizations Exam Bank
Course Introduction
Business Organizations explores the legal and structural framework of various entities through which business is conducted, including sole proprietorships, partnerships, limited liability companies, and corporations. The course examines issues such as formation, management, fiduciary duties, liability, financing, and dissolution of these entities, as well as the relationships among owners, managers, and other stakeholders. Emphasis is placed on understanding the practical and legal implications of choosing and operating different business structures, while considering the impact of regulatory, ethical, and market forces on business decision-making.
Recommended Textbook
Business Law Text and Cases 14th Edition by
Kenneth W. Clarkson
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Page 2
Chapter 1: Law and Legal Reasoning
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Q1) Procedural law consists of all laws that outline the methods of enforcing rights.
A)True
B)False
Answer: True
Q2) A provision in the California state constitution conflicts with a provision in the U.S. Constitution. If challenged
A) neither provision will be enforced.
B) the provisions will be balanced to reach a compromise.
C) the state provision, not the U.S. Constitution, will be enforced.
D) the U.S. Constitution, not the state provision, will be enforced.
Answer: D
Q3) Judge Bell decides that the precedent for the case she is hearing is no longer correct due to technological changes. She overturns the precedent when she decides the case. It is likely that her case will A) go unnoticed by the public.
B) be thrown out of court.
C) receive a great deal of publicity.
D) be ignored by the media.
Answer: C
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Page 3
Chapter 2: Courts and Alternative Dispute Resolution
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Sample Questions
Q1) For jurisdictional purposes, corporations are considered legal persons.
A)True
B)False
Answer: True
Q2) In most states, in suits brought in small claims courts, lawyers are allowed.
A)True
B)False
Answer: True
Q3) In many cases, a court can exercise jurisdiction over an out-of-state defendant who has done business in the state only over the Internet.
A)True
B)False
Answer: True
Q4) Hope wants to file a suit against Gerry. For a court to hear the case,
A) Gerry must agree.
B) the court must have jurisdiction.
C) the parties must have no minimum contacts with each other.
D) the parties must own property.
Answer: B
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Chapter 3: Court Procedures
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Q1) Daniel files a suit against Ava, alleging that she failed to pay him for two months' labor at her Choice Cheese Factory. Ava denies the charge and claims that Daniel breached their contract to produce a certain quantity of cheeses and owes Ava damages for the breach. Ava's claim is a
A) contra charge.
B) counterclaim.
C) counterpoint.
D) cross-complaint.
Answer: B
Q2) A summary judgment is issued only if there is no genuine question of fact.
A)True
B)False
Answer: True
Q3) Only a defendant can file a motion to dismiss.
A)True
B)False
Answer: False
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Chapter 4: Business and the Constitution
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Q1) The U.S. Constitution explicitly mentions a general right to privacy.
A)True
B)False
Q2) Serene City enacts an ordinance that bans the use of "sound amplifying systems" on public streets. Tyler wants to campaign for a seat on the city council by broadcasting his message through speakers mounted on a truck. In Tyler's suit against the city, a court would likely hold the ordinance to be
A) an unconstitutional restriction of speech.
B) constitutional under the First Amendment.
C) justified by the need to protect individual rights.
D) necessary to protect national interests.
Q3) The Fifth Amendment prohibits unreasonable searches and seizures of persons or property.
A)True
B)False
Q4) Substantive due process limits what the government can do in its legislative and executive capacities.
A)True
B)False
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Chapter 5: Business Ethics
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Q1) If an action is legal, it is ethical.
A)True
B)False
Q2) Corporations can be viewed as "citizens" that are expected to participate in bettering society.
A)True
B)False
Q3) Few companies provide any kind of support such as ethical training programs to make their ethical codes more effective.
A)True
B)False
Q4) The legality of an action is always clear.
A)True
B)False
Q5) Business owners' misbehavior has no negative consequences for their business. A)True
B)False
Q6) Effective corporate ethical policies must be clearly communicated to employees. A)True
B)False
Page 7
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Chapter 6: Tort Law
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Q1) In a digital billboard ad, Mainstream Headwaters falsely accuses Northwest Passages, a competitor, of selling stolen kayaks, canoes, and other boats and boating gear. Northwest's sales decrease. Mainstream has most likely committed A) defamation.
B) no tort.
C) slander of quality.
D) slander of title.
Q2) Dixie, a driver for Express Delivery Company, leaves the truck's motor running in neutral and carelessly forgets to set the parking brake while she makes a delivery. The truck rolls and crashes into a nearby gas station pump, igniting a fire that spreads quickly to a construction site a block away. A burned wall collapses onto a crane, which falls on Fazio, a bystander, and injures him. What must Fazio show to recover damages from Express Delivery?
Q3) Failure to live up to a standard of care may be an act or an omission.
A)True
B)False
Q4) A defamatory statement must be communicated to a third party to be actionable.
A)True
B)False
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Chapter 7: Strict Liability and Product Liability
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Q1) Flo is working on a construction site when she is injured on the job in the collapse of a Girder Company-made beam. At the time, Flo is not wearing any safety gear. In Flo's product liability suit against Girder, the company can most successfully raise the defense of
A) preemption.
B) inadequate warning.
C) comparative negligence.
D) product misuse.
Q2) Sno Sports LLC makes and sells a snowboard to Toby. Sno Sports fails to exercise "due care" to make the board safe, and Toby is injured as a result. Sno Sports is most likely liable for
A) any alteration of the skis after Sno Sports sold them.
B) misrepresentation.
C) negligence.
D) nothing.
Q3) Under the doctrine of strict liability, liability is imposed only if a person fails to use reasonable care.
A)True
B)False
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Chapter 8: Intellectual Property Rights
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Sample Questions
Q1) A certification mark distinguishes products approved, or "certified," by the government.
A)True
B)False
Q2) Sweetleaf Company bottles and sells maple syrup from its plant in Vermont. On the labels is a logo that states "100% Genuine New England Maple Syrup Certified by the Northeast Maple Syrup Harvesters Association." This logo is
A) a certification mark.
B) None of the choices.
C) none of the choices.
D) trade dress.
Q3) A trade name cannot be protected if it is unusual.
A)True
B)False
Q4) A personal name is not protected under trademark law if it acquires a secondary meaning.
A)True
B)False
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Page 10
Chapter 9: Internet Law, Social Media, and Privacy
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Q1) BeFriends Corporation uses the trademark of Community Life Inc., a social media site, as a meta tag without Community Life's permission. This may be permissible
A) if the appropriating site has nothing to do with the meta tag.
B) if the two sites appear in the same search engine results.
C) if the use constitutes trademark infringement.
D) under no circumstances.
Q2) Basso includes in his song "Chords" a few seconds of Dante's copyrighted sound recording "Etudes" without permission. Some federal courts have found that such digital sampling is
A) a violation of copyright law.
B) a "fair use" exception to the provisions of the act.
C) not a "fair use" exception to the provisions of the act.
D) all of the choices.
Q3) Federal law prevents a provider of communication services-such as a cell phone company-from divulging private communications to certain entities and individuals.
A)True
B)False
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11
Chapter 10: Criminal Law and Cyber Crime
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Q1) Changing a trademark is forgery.
A)True
B)False
Q2) It is not a crime to defraud the public through the use of e-mail ads.
A)True
B)False
Q3) Picking pockets is not robbery.
A)True
B)False
Q4) Individuals who are arrested must be informed of certain constitutional rights.
A)True
B)False
Q5) Enrico accesses Finance Bank's computer system without authority to obtain protected financial and credit records. Under federal law, this is
A) a felony if it was done for a commercial purpose.
B) a felony if the bank brings a civil suit against Enrico.
C) not a crime.
D) a crime but not a felony.
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Chapter 11: Nature and Terminology
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Q1) When a contract's writing is not clear, a court will not consider evidence outside the contract to interpret its terms.
A)True
B)False
Q2) A contract is an agreement that can be enforced in court.
A)True
B)False
Q3) Every contract involves at least three parties.
A)True
B)False
Q4) A court will normally interpret the language of a contract according to what the parties claim their intent was when they made it.
A)True
B)False
Q5) If a contractual promise is not fulfilled, the person who made it may be required to perform the promised act.
A)True
B)False
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Chapter 12: Agreement in Traditional and E-Contracts
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Q1) If no time for acceptance is specified in an offer, the offer terminates after a reasonable length of time.
A)True
B)False
Q2) Idina admires Jules's collection of guitars. July says, "I plan to sell the collection when I get tired of it." Jules's statement is
A) an offer.
B) not an offer because it has not been communicated to Idina.
C) not an offer because July expressed only an intent to enter into a future contract.
D) an acceptance.
Q3) Generally, an offeree's power of acceptance is terminated when the offeror or offeree dies.
A)True
B)False
Q4) There are no revocable offers.
A)True
B)False
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Chapter 13: Consideration
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Q1) A release bars any further recovery beyond the terms stated in the release.
A)True
B)False
Q2) A contract that one party retains the exclusive right to cancel at any time is unenforceable.
A)True
B)False
Q3) A release is an agreement in which one party gives up the right to pursue a legal claim against another party.
A)True
B)False
Q4) Industrial Engineering, Inc., promises to give stock options to Jasmine for processes she has already designed for the firm. This promise is enforceable
A) because it is a new contract.
B) because it is an illusory promise.
C) because it is supported by past consideration.
D) under no circumstances.
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Chapter 14: Capacity and Legality
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Q1) At age seventeen, Eve enters into a contract with Fit Health Club. Two years later, when Eve attempts to disaffirm the contract, Fit files a suit against her. The court will most likely consider the contract ratified if it is A) executed.
B) executory.
C) disaffirmed.
D) rescinded.
Q2) Jake and Kline make an illegal contract that unjustly enriches Jake at the expense of Kline. A court will
A) not be concerned with the unjust enrichment of Jake.
B) award damages to Kline.
C) reform the contract to prevent undue burdens.
D) enforce the contract as it was originally written.
Q3) Any contract to commit a crime is unenforceable.
A)True
B)False
Q4) In an employment contract, a covenant not to compete is unenforceable.
A)True
B)False
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Chapter 15: Mistakes, Fraud, and Voluntary Consent
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Q1) A unilateral mistake always gives the mistaken party a right to relief from the contract.
A)True
B)False
Q2) Mona is induced by her guardian Newt to sign a contract to invest her student loan funds in OptiBank through Newt's investment firm. Unknown to Mona, Newt realizes a commission from the investment. Most likely, Mona may rescind the contract on the basis of
A) duress.
B) fraud.
C) mistake.
D) undue influence.
Q3) Nero is an elderly man who lives with his nephew Mervyn. Nero is dependent on Mervyn for support. Mervyn advises Nero to "invest" in Mervyn's "professional gambling" venture, or Mervyn will no longer support him. Nero liquidates his other investments and signs a contract with Mervyn, to whom Nero gives the funds. Can Nero set aside this contract?
Q4) Avoiding the enforcement of a standard-form contract is not possible.
A)True
B)False
Page 17
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Chapter 16: The Writing Requirement in Our Digital World
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Q1) The Statute of Frauds operates as a defense to the enforcement of an oral contract for the sale of land.
A)True
B)False
Q2) Ray agrees to buy one hundred pounds of almonds from Sol. To be enforceable, the agreement must be in writing if the almonds cost at least
A) $50.
B) $250.
C) $499.
D) $500.
Q3) To be enforceable, a memorandum evidencing an oral contract must include the essential terms.
A)True
B)False
Q4) Oral evidence to "fill in the gaps" of a contract with incomplete terms can be introduced at a trial.
A)True
B)False
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Chapter 17: Third Party Rights
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Q1) An "assignment of all rights" creates an assignment of rights and a delegation of duties.
A)True B)False
Q2) Refer to Fact Pattern 17-1. Delta will realize a profit from the sale of products to Four-Square to remodel Carol's store. Delta is A) a delegatee.
B) an assignee.
C) an incidental beneficiary.
D) an intended beneficiary.
Q3) A transfer of contract rights to a third party is an assignment.
A)True B)False
Q4) If a contract requires that performance be rendered directly to a third party, the third party is an intended beneficiary.
A)True B)False
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19
Chapter 18: Performance and Discharge
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Q1) If no time for performance is stated in a contract, a reasonable time is implied.
A)True
B)False
Q2) Stephanie enters into a contract to work as a lifeguard at Tim's Water Park for the summer in exchange for a weekly paycheck and free admission to the park's attractions. If the duties under this contract are discharged like those under most contracts, the duties will be
A) avoided.
B) breached.
C) performed.
D) rescinded.
Q3) Performance can be accomplished by tender.
A)True
B)False
Q4) Refer to Fact Pattern 18-1. Natalie's performance is most likely
A) a material breach.
B) a minor breach.
C) a reasonable breach.
D) no breach.
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Chapter 19: Breach of Contract and Remedies
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Q1) Equine World enters into a contract with FabuloSales to provide Equine World with a plan to repurpose its marketing strategy. If FabuloSales breaches the contract, Equine World has a duty to
A) reduce the damages that Equine World might otherwise suffer.
B) reduce the loss that FabuloSales might otherwise suffer.
C) punish FabuloSales and deter others from similar acts.
D) take no action.
Q2) Rita contracts to work for Social Media Corporation (SMC) during April for $4,500. On March 31, SMC cancels the contract. Rita declines a job of a different type and rank with Tech Talk, Inc., which would have paid $3,500. Rita files a suit against SMC. As compensatory damages, Rita can recover
A) $4,500.
B) $3,500.
C) $1,000 in shares of SMC stock.
D) $0.
Q3) Ordinarily, the remedy for a seller's breach of a contract for a sale of real estate is specific performance.
A)True
B)False
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Page 21
Chapter 20: The Formation of Sales and Lease Contracts
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Q1) The UCC requires a contract modification to be supported by new consideration.
A)True
B)False
Q2) Under the UCC, an oral contract for a sale of goods is enforceable if goods have been received and accepted.
A)True
B)False
Q3) Sara and Tim enter into a contract for a sale of orchids. With respect to the specific contractual provisions set out in the UCC, these parties may
A) agree to different terms only to a reasonable extent.
B) agree to different terms unless they "get caught."
C) agree to whatever terms they wish.
D) not agree to different terms.
Q4) Goods associated with real estate never fall within the scope of UCC Article 2.
A)True
B)False
Q5) Goods associated with real estate often fall within the scope of Article 2.
A)True
B)False
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Chapter 21: Title, Risk, and Insurable Interest
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Q1) In most situations involving sales, rights and liabilities are determined by who has the title to the goods.
A)True
B)False
Q2) Spuds Corporation buys from Tater Farms, Inc., a potato crop that Tater plans to plant and harvest during the next growing season. Spuds plans to sell the potatoes to Tasty Foods Restaurants. After the potatoes are planted, but before they are harvested, an insurable interest in the crop exists in
A) Spuds and Tater, but not Tasty Foods.
B) Spuds, Tater, and Tasty Foods.
C) Tater only.
D) none of the choices.
Q3) Brad leaves an iPod at Computer Sales & Repair (CSR) to have the battery replaced. CSR sells the iPod to Doris, who does not know that it belongs to Brad. Brad can recover from
A) no one.
B) CSR.
C) Doris.
D) Apple, Inc., the maker of the iPod.
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Page 23
Chapter 22: Performance and Breach of Sales and Lease Contracts
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Q1) Okay Markets, Inc., rejects a shipment of turkey that does not conform to its contract with Poultry Processing Corporation, but is unable to obtain instructions from the seller. Okay Markets can
A) destroy the goods.
B) cure the goods to make them conform to the contract.
C) retain the goods without paying for them.
D) reship or store the goods for the seller.
Q2) A buyer's failure to cover will bar him or her from using any other remedies available under the UCC.
A)True
B)False
Q3) The seller's or lessor's major obligation under a sales contract is to tender conforming goods to the buyer or lessee.
A)True
B)False
Q4) Tender must occur at a reasonable hour and in a reasonable manner. A)True
B)False
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Chapter 23: Warranties
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Q1) Aerospace, Inc., makes and sells flight navigation equipment, through independent salespersons, to retailers for resale to consumers. The Magnuson-Moss Warranty Act covers
A) implied warranties, oral statements, and written promises.
B) only implied warranties that consumers are aware of.
C) only a salesperson's oral statements.
D) only a seller's written promises.
Q2) Fred buys running shoes from Gear Store, telling the clerk that he wants the shoes to compete in High Pace Triathlon. The shoes break apart during the competition, causing Fred to fall and sustain an injury. The seller most likely breached
A) an express warranty.
B) an implied warranty of fitness for a particular purpose.
C) an implied warranty of merchantability.
D) none of the choices.
Q3) Merchants are not required to warrant that the goods they sell are fit for their ordinary purpose.
A)True
B)False
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Chapter 24: International and Space Law
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Q1) The doctrine of sovereign immunity can immunize a foreign nation from the jurisdiction of U.S. courts.
A)True
B)False
Q2) Under the principle of comity, all foreign governments are subject to all U.S. laws.
A)True
B)False
Q3) The Outer Space Treaty provides that a nation retains jurisdiction over objects on its space registry that are launched into space. The treaty also prohibits interference with space activities. In effect, these provisions
A) ban the national appropriation of territory in space.
B) protect property rights with respect to private space activities.
C) assert sovereignty over celestial bodies.
D) declare exclusive international jurisdiction over space locations.
Q4) When a U.S. firm wishes to increase its involvement in an international market, it normally establishes an agency relationship with a foreign firm.
A)True
B)False
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Chapter 25: Negotiable Instruments
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Q1) To borrow funds to finance his business, Rollo executes an instrument in favor of Security Bank. For the instrument to be negotiable, the signature must be
A) anywhere on the instrument.
B) anywhere on the lower half of the instrument only.
C) in the lower left-hand corner of the instrument only.
D) in the lower right-hand corner of the instrument only.
Q2) On a cashier's check, the bank is the drawer.
A)True
B)False
Q3) A personal check cannot be a negotiable instrument.
A)True
B)False
Q4) A promissory note must name a specific payee to be negotiable.
A)True
B)False
Q5) Refer to Fact Pattern 25-3. The instrument that Bea signed is most likely
A) a certificate of deposit.
B) a draft.
C) an order to pay.
D) a promissory note.
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Chapter 26: Transferability and Holder in Due Course
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Q1) A holder cannot become an HDC if he or she has notice of any claim to the instrument or defense against it.
A)True
B)False
Q2) A holder does not take an instrument for value if he or she gives a negotiable instrument as payment.
A)True
B)False
Q3) A restrictive indorsement does not destroy negotiability.
A)True
B)False
Q4) The effect of a conditional indorsement on the back of an instrument differs from the effect of conditional language that appears on its face.
A)True
B)False
Q5) A purchaser can become an HDC of an instrument even if it is so incomplete that an element of negotiability is lacking.
A)True B)False
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Chapter 27: Liability, Defenses, and Discharge
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Q1) Nan, an accountant for Outdoor Outfitters, Inc., issues company checks payable to nonexistent persons drawn on Outdoor's account at Peerless Bank. Nan indorses the checks and deposits them in her account. Outdoor discovers the theft and demands that Peerless recredit its account. Peerless's best defense is that
A) Nan was not authorized to issue the checks.
B) Outdoor was in a better position than Peerless to prevent the theft.
C) Peerless did not know that the checks were not to be paid.
D) the checks were the property of Outdoor, not Peerless.
Q2) Harley signs a check payable to Pro Accountants, P.C., and gives it to Pro, leaving the amount blank but authorizing the firm to fill in the check for $10,000. Pro fills in $15,000 and negotiates the check to Valley Bank, to whom Pro owes $15,000. Valley Bank, an HDC, can enforce the check for
A) $0.
B) $5,000.
C) $10,000.
D) $15,000.
Q3) Notice of dishonor can be given in any reasonable manner.
A)True
B)False
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Page 29
Chapter 28: Banking in the Digital Age
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Q1) Smith & Jones P.A. is a business customer of Platinum Bank. Under federal law, Smith & Jones cannot demand
A) any proof of payment except the bank's good faith.
B) monthly statements.
C) recrediting of its account on payment of a forged item.
D) the return of its original checks with its monthly statements.
Q2) Refer to Fact Pattern 28-1. If Choice pays the check, the bank
A) is liable to Auto Repair for the time and trouble to return the payment.
B) is liable for Kelly's loss due to the wrongful payment.
C) can sue Auto Repair for breach of contract.
D) can sue Kelly for a wrongful stop-payment order.
Q3) Stored-value cards can be used to buy goods and services offered by the cards' issuer.
A)True
B)False
Q4) Only a customer or a person authorized to draw on an account can order a bank not to pay a check when it is presented for payment.
A)True
B)False
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Chapter 29: Creditors Rights and Remedies
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Q1) Dan defaults on a debt to Rachel. Rachel will not be able to recover the debt from
A) the sale of Dan's prize-winning pet dog.
B) the sale of Dan's investments in stocks.
C) Dan's wages.
D) Dan's lottery winnings.
Q2) George borrows funds from Hometown Credit Union (HCU) to buy real property. George signs a written instrument that gives HCU an interest in the property as security for the debt's payment. This is
A) a mortgage.
B) an artisan's lien.
C) a workout agreement.
D) a suretyship arrangement.
Q3) A defaulting debtor cannot redeem nonexempt property before a sale under a writ of execution.
A)True
B)False
Q4) A default occurs when a debtor fails to pay a creditor as promised.
A)True
B)False
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Chapter 30: Secured Transactions
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Q1) 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.
Q2) Jones lives in Illinois, but works in Indiana. Jones borrows $1,000 from Heartland Bank, using her car as collateral. To perfect its security interest, the bank must file its financing statement in at least
A) every state.
B) Illinois.
C) Illinois and Indiana.
D) Indiana.
Q3) Market Credit Corporation is the secured party in a secured transaction with Northwest Outfitters. Market Credit could also be referred to as A) the debtor.
B) the secured creditor.
C) the security interest.
D) the filing officer.
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Page 32
Chapter 31: Bankruptcy Law
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Q1) Farrah buys a car from Go Motors, financing the purchase through a loan. Less than a year later, she files for bankruptcy underChapter 13. Her plan must provide that Go has a lien on the car until the entire debt is paid
A) under no circumstances.
B) if Go extended credit for all or part of the purchase price of the car.
C) if any of the loan for the car remains unpaid, regardless of the creditor.
D) if her other creditors do not object.
Q2) Rulings from bankruptcy courts are final-they cannot be appealed.
A)True
B)False
Q3) If the assets in a debtor's estate in bankruptcy are insufficient to pay fully all creditors, the debtor is liable for the difference.
A)True
B)False
Q4) The filing of a petition for bankruptcy will automatically stay most legal actions against the debtor.
A)True
B)False
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Chapter 32: Agency Formation and Duties
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Q1) Any copyrighted work created by an employee within the scope of his or her employment at the request of the employer is a "work for hire."
A)True
B)False
Q2) Employment laws apply to the employer-independent contractor relationship.
A)True
B)False
Q3) Refer to Fact Pattern 32-2. Garage Door authorizes Homer to sell garage door upgrades and accessories at the buyers' locations at prices that Homer negotiates with those buyers. With respect to sales at those locations, Homer is
A) an independent contractor.
B) an employee only.
C) an employee and agent.
D) a principal.
Q4) Remedies of the agent for breach of duty by the principal follow normal contract and tort remedies.
A)True
B)False
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Page 34
Chapter 33: Agency Liability and Termination
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Q1) An agency can terminate once its purpose is achieved.
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) A partially disclosed principal is only partially liable to a third party for a contract made by an agent.
A)True
B)False
Q4) A principal cannot be estopped from denying that an agent has authority.
A)True
B)False
Q5) Giving an agent a power of attorney confers express authority.
A)True
B)False
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Chapter 34: Employment, Immigration, and Labor Law
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Q1) Workers are eligible for unemployment compensation even if they were fired for misconduct or voluntarily left their jobs.
A)True
B)False
Q2) To be protected by federal labor law, an individual must be an employee or a job applicant.
A)True B)False
Q3) Employees can voluntarily pay overtime wages to otherwise ineligible employees.
A)True
B)False
Q4) If a union loses the majority support of those it represents, an employer is not obligated to continue recognition of the union.
A)True
B)False
Q5) Medicare is funded by contributions from the employer and the employee.
A)True B)False
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Chapter 35: Employment Discrimination
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Q1) Oren believes that Power Utility Corporation (PUC) has discriminated against him on the basis of race. He files a suit against PUC under the Civil Rights Act. To establish a prima facie case of employment discrimination, Oren must show that
A) he is a member of a protected class.
B) PUC has no legal defenses against the claim.
C) discriminatory intent motivated PUC's act.
D) no other firm in PUC's industry has committed a discriminatory act.
Q2) Mena, a female, and Neil, a male, are employees of Operational Processes Corporation. Mena regularly e-mails sexually explicit images to Neal via Operational's network. Neil finds this offensive. This is
A) hostile-environment harassment.
B) not harassment or any form of discrimination.
C) quid pro quo harassment.
D) same-gender harassment.
Q3) The Age Discrimination in Employment Act prohibits mandatory retirement for nonmanagerial workers.
A)True
B)False
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Chapter 36: Small Businesses and Franchises
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Q1) The laws governing franchising are primarily designed to protect franchisors from dishonest franchisees.
A)True
B)False
Q2) A franchisee is generally economically independent of the franchisor's integrated business system.
A)True B)False
Q3) Bill sells Corner Deli, a sole proprietorship, to Debra. This is
A) a franchise.
B) not a transfer of ownership without the other owners' approval.
C) not a transfer of ownership-a sole proprietorship cannot be transferred.
D) a transfer of the ownership of the business.
Q4) The day-to-day operation of the franchise business normally is under the control of the franchisor.
A)True B)False
Q5) The duration of a franchise is determined by federal or state statutes.
A)True
B)False
38
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Chapter 37: All Forms of Partnerships
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Q1) The intent to associate is irrelevant in terms of the elements of a partnership.
A)True
B)False
Q2) Refer to Fact Pattern 37-2. Kristin signs a contract with Nature's Best Chocolate, a candy maker, apparently on Mobile's behalf. The contract is binding on
A) Kristin, Lindsey, and Mobile.
B) Kristin only.
C) Mobile only.
D) Nature's Best only.
Q3) Selections, a general partnership, operates a gift shop. Selections has five partners. Tony has a one-third interest in the partnership. Each of the other partners has a one-sixth interest. With respect to management decisions
A) a majority of the partners must agree.
B) Tony rules.
C) the senior partner decides.
D) four of the partners must agree.
Q4) A partner's profit from a partnership is taxed as income to the firm.
A)True
B)False
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Chapter 38: Limited Liability Companies and Special Business Forms
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Q1) Every limited liability company is a citizen of every state.
A)True
B)False
Q2) When a limited liability company is dissolved, any member, including those who wrongfully dissociated, may participate in the winding up process.
A)True
B)False
Q3) GMO Grain Corporation and Hybrid Yields, Inc., form a joint stock company. The ownership of a joint stock company is represented by A) partnership certificates.
B) shares of stock.
C) title documents.
D) trust certificates.
Q4) A joint venture is taxed like a corporation.
A)True
B)False
Q5) Foreign investors cannot participate in a limited liability company. A)True
B)False
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Chapter 39: Corporate Formation and Financing
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Q1) Like the bylaws of other corporations, the bylaws of Rocks, Paper & Scissors, Inc.,
A) establish the operating name of the corporation.
B) establish the value and classes of corporate stock.
C) were adopted at its first organizational meeting.
D) were submitted for approval to the public official in charge.
Q2) The shares of Home Mortgage Corporation are publicly traded in securities markets. Home Mortgage Corporation is
A) a close corporation.
B) a privately held corporation.
C) a public corporation.
D) a publicly held corporation.
Q3) Bylaws are the internal rules of management for a corporation.
A)True B)False
Q4) The purpose of a corporation may not be specified in its articles of incorporation. A)True B)False
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Chapter 40: Corporate Directors, Officers, and Shareholders
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Q1) A dividend is a right given by a company to buy stock at a stated price by a specified date.
A)True
B)False
Q2) As a corporation, Paper Products Company can pay dividends if
A) their payment allows the firm to remain solvent.
B) their payment causes the firm to become insolvent.
C) they are paid from an unauthorized account.
D) they are paid when the firm is insolvent.
Q3) Directors can delegate work to corporate officers and employees. A)True
B)False
Q4) A vacancy on the board of directors can be filled by the board itself. A)True
B)False
Q5) In most states, an individual can be an officer or a director of a corporation, but not both at the same time.
A)True
B)False
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Chapter 41: Mergers and Takeovers
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Q1) On a merger, one corporation inherits all of the rights and liabilities of its predecessors.
A)True
B)False
Q2) In some states, a consolidation follows the same procedure as the incorporation of any new corporation.
A)True
B)False
Q3) Bagels & Donuts Corporation wants to purchase all of the assets of Coffee & Tea Inc. Dana is a Coffee & Tea shareholder. The approval of Dana and other Coffee & Tea shareholders is necessary
A) in all circumstances.
B) in no circumstances.
C) only if Coffee & Tea will be paid with unauthorized, unissued stock.
D) only if Bagels & Donuts agrees to assume Coffee & Tea's liabilities.
Q4) To resist a takeover, a target company may make a self-tender.
A)True
B)False
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Page 43
Chapter 42: Investor Protection, Insider Trading, and Corporate Governance
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Q1) Global Trade Corporation is a public company that is poised to issue securities that do not qualify for an exemption from registration. This means that Global Trade must A) file a registration statement with the SEC.
B) issue the securities through an online registration site.
C) refrain from issuing the securities to unregistered investors.
D) register the securities with a national stock exchange.
Q2) HVAC Heating & Air Conditioning, Inc., is a public company whose shares are traded in the public securities markets. Under the Sarbanes-Oxley Act of 2002, to ensure that HVAC's financial results are accurate and timely, the firm's senior officers must set up and maintain
A) internal "disclosure controls and procedures."
B) external "release and reveal timetables."
C) personal "peruse and review liability policies."
D) public "information and discussion forums."
Q3) Corporate "outsiders" may be held liable for insider trading under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5.
A)True
B)False
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Chapter 43: Administrative Agencies
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Q1) The Merit Systems Protection Board issues a rule. Like other administrative agencies' rules, this rule is as
A) binding as a law passed by Congress.
B) persuasive as an expert's opinion.
C) suggestive as a newspaper's editorial.
D) unenforceable as a salesperson's puffery.
Q2) Pure Water Company is subject to a decision by the Environmental Protection Agency. Pure Water appeals the decision, arguing that it is arbitrary and capricious. This could mean that the decision
A) changed the agency's prior policy without justification.
B) followed a consideration of all relevant factors.
C) was accompanied by a rational explanation.
D) was plainly warranted by the evidence.
Q3) Once an agency has been created, it cannot be abolished.
A)True
B)False
Q4) Federal regulations take precedence over conflicting state regulations.
A)True
B)False
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Chapter 44: Consumer Law
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Q1) Credit can be denied solely on the basis of marital status.
A)True
B)False
Q2) Spicy Salsa Company complains to the Federal Trade Commission (FTC) about an ad by Tangy Sauces Inc., Spicy's competitor. The FTC investigates and concludes that the ad is deceptive. The FTC's next step is to
A) conduct negotiations between the competitors.
B) send a formal complaint.
C) issue a cease-and-desist order.
D) permit Spicy Salsa to distribute a similarly deceptive counter-ad.
Q3) Teri borrows $10,000 from USA Bank to remodel a room in her home. This transaction is subject to
A) no federal law.
B) the Consumer Leasing Act.
C) the Consumer Product Safety Act.
D) the Truth-in-Lending Act.
Q4) Ads can be unfair but not deceptive.
A)True
B)False
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Chapter 45: Environmental Protection
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Q1) Regulations governing air pollution cover mobile and stationary sources. Those who may be subject to penalties for violations of the Clean Air Act include
A) corporate officers who knowingly violate the act.
B) persons who provide information about violators but otherwise fail to act.
C) private citizens who fail to sue violators.
D) none of the choices.
Q2) Smelting & Refining Company generates solid waste considered hazardous. The company labels and packages properly all waste to be transported to a disposal site. Under the Resource Conservation and Recovery Act, this is most likely
A) not a violation.
B) a violation because Smelting & Refining generates solid waste.
C) a violation because the waste is transported off-site.
D) a violation because the waste is considered hazardous.
Q3) Injured individuals can rely on the common law to obtain damages from business polluters.
A)True
B)False
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Chapter 46: Antitrust Law
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Q1) By contract, Oil Shale Corporation forbids Petro, Inc., a wholesale buyer of Oil Shale's products, from purchasing the products of its competitors. This exclusive-dealing contract is allowed
A) under any circumstances.
B) if its effect is to cause a competitor a loss of any business.
C) if its effect is to substantially lessen competition.
D) unless there is no effect on a competitor.
Q2) Spa Company makes and sells beauty salon supplies. By selling its products at prices substantially below the normal cost of production, Spa hopes to drive its competitors from the market. This is
A) predatory bidding.
B) predatory pricing.
C) price discrimination.
D) price-fixing.
Q3) An agreement that is deemed a per se violation will be examined by a court to determine whether the agreement actually constitutes a reasonable restraint of trade.
A)True
B)False
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Chapter 47: Professional Liability and Accountability
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Q1) Nguyen Imports, Inc., accuses Ogilvie, an accountant, of committing defalcation. This is
A) embezzlement.
B) general misconduct.
C) professional negligence.
D) misrepresentation of professional expertise.
Q2) Everett is an accountant whose clients include Finance & Capital, Inc. Under the Ultramares rule, if Everett is negligent in his work for Finance & Capital, he could be liable to Finance & Capital and
A) any third party.
B) no third party with whom the accountant is not in privity or "near privity."
C) third parties who are foreseen users of the work.
D) third parties who are reasonably foreseeable users of the work.
Q3) Under rules of professional conduct, a lawyer should not engage in conduct involving "dishonesty."
A)True
B)False
Q4) The competency of professionals' service is never an issue.
A)True
B)False
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Chapter 48: Personal Property and Bailments
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Q1) James works at Kay's Breakfast Café. After work, in the parking lot, James finds a diamond ring lost by Lani. Title to the ring is possessed by A) James.
B) Kay's.
C) Lani.
D) the state.
Q2) Real property can not be turned into personal property by any method. A)True
B)False
Q3) Barney's Burgers requires that its employees wear uniforms and protective clothing on the job. Barney's provides a locker room for the employees to leave their street clothes and personal items while working. A sign on the back of the locker room door states, "Barney's is not responsible for the loss of any property in the locker room." Chuck, a Barney's employee, changes his clothes in the locker room before starting work and leaves his wallet and watch in a pocket of his jacket hanging in his locker. When he returns after his shift, the wallet and watch are gone. Does Chuck's leaving personal items in the locker room constitute a bailment? If so, what type of bailment? If not, what legal relationship is it? Does Barney's sign exculpate the company for Chuck's loss? Why or why not?
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Page 50
Chapter 49: Real Property and Landlord-Tenant Law
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Q1) A fixed-term tenancy is created when property is leased for a specified period of time.
A)True B)False
Q2) In every leasehold estate, the tenant has an unqualified right to exclusive possession.
A)True B)False
Q3) Property used by a government for a public purpose such as a park is community property.
A)True
B)False
Q4) The holder of a life estate has the right to use property for whatever purpose he or she sees fit without regard to the rights of a fee simple owner.
A)True B)False
Q5) The landlord is responsible for all damage to leased premises. A)True B)False
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Chapter 50: Insurance
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Q1) Mena applies for a homeowners' insurance policy on her house with Neighbors Insurance Company through Obie, an agent who works for Neighbors. In this transaction, Obie is
A) an agent for both parties.
B) Mena's agent, and not Neighbors's agent.
C) Neighbors's agent, and not Mena's agent.
D) not an agent.
Q2) Organic Produce Company obtains an insurance policy to protect against losses incurred by the firm as a result of being held liable for personal injuries or property damage sustained by others. This is
A) casualty insurance.
B) fire insurance.
C) life insurance.
D) malpractice insurance.
Q3) An absolute defense against payment exists if the insurer can show that the insured lacked an insurable interest.
A)True
B)False
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Chapter 51: Wills and Trusts
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Q1) Paul makes a gift of real estate in his will to Orly. This is A) a bequest.
B) a devise.
C) a legacy.
D) a residuary.
Q2) A will can be partially revoked.
A)True
B)False
Q3) Greg dies without a will. His survivors include his spouse Helen and his two children, Irene and John. Under applicable laws, of Greg's estate, Helen will probably receive A) everything.
B) nothing.
C) one-half.
D) one-third.
Q4) An "X" can qualify as a signature on a will. A)True
B)False
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Chapter 52: The Legal Environment of Business
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Q1) Cell Service Corporation pads all of its customers' bills with an unexpected fee, adding up to millions in profit for Cell at a small expense for each individual customer. In this situation, the customers could most affordably fight this charge by
A) bringing individual lawsuits.
B) engaging in individual arbitration.
C) filing a class action.
D) taking their case to the state legislature.
Q2) Salma wishes to file a suit in a Texas state court against Ubi. Texas allows for service of process via social media if Salma can authenticate Ubi's social media account. Allowing service of process only by means of social media raises a question whether that service comports with A) due process.
B) the Federal Rules of Civil Procedure.
C) the freedom to contract.
D) the rules of evidence.
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Chapter 53: Torts and Crimes
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Q1) USA Sales Company publishes a "Privacy Policy" to attract customers, but fails to invest adequate resources in cyber security. A lack of security that allows hackers to steal customers' personal data from a business's computer system can be
A) the hackers' defense to criminal charges.
B) the ground for a suit by the Federal Trade Commission.
C) the basis for USA's recovery under a traditional insurance policy.
D) a source of bad publicity, but there are no other consequences.
Q2) The existence of an ethical duty on the part of Commerce & Trade Company, and other businesses, to prevent an attack by hackers on business computer systems, and consequent theft of customers' and employees' personal data, is evidenced by
A) a business's offer of credit monitoring in the event of a breach.
B) a business's cyber security insurance.
C) the individuals' trust in the business to protect their data.
D) a business's stated "Privacy Policy."
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Chapter 54: Contracts and E-Contracts
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Q1) Mainstay, Inc., sponsors NowUCMe, a social-networking, video- and photo-sharing site. To use NowUCMe, Mainstay requires users to accept terms of service associated with the site. By clicking on "accept," users enter into a contract
A) after thirty days.
B) as soon as they begin to use the service.
C) when a court declares that a contract exists.
D) under no circumstances.
Q2) O'Malley contracts to deliver a crop of organic mandarin oranges to Pete's Natural Produce Mart. An unexpected freeze destroys the oranges in O'Malley's orchard. Pete's insists that O'Malley deliver by acquiring the oranges on the open market. O'Malley claims that this is prohibitively expensive. The best argument against enforcing the contract is
A) frustration of purpose.
B) objective impossibility of performance.
C) anticipatory repudiation.
D) commercial impracticability.
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Chapter 55: Domestic and International Sales and Lease Contracts
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Q1) Web Resource Inc. and World Marketing Ltd., businesses located in different countries, agree to a contract. Like different individuals, Web Resource and World Marketing have different perceptions of what the agreement between them is and what it means to fulfill it. This is because
A) in every country arbitration is the preferred method of dispute resolution.
B) in every country it is acceptable to file an action in a court to resolve a dispute.
C) a business contract is only the expression of the framework of a deal.
D) Web Resource and World Marketing are influenced by different cultures.
Q2) Home Grown Inc. is a firm based in the United States that does business overseas. When entering into a business contract, when deciding which terms to include, and when choosing a method to resolve a dispute, Home Grown should
A) rely solely on legal principles rather than the business relationship.
B) assume that a party in another country has the same contractual expectations as a party in the United States.
C) be alert to cultural influences.
D) stay inflexible in the face of others' social and cultural practices.
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Page 57
Chapter 56: Negotiable Instruments
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Q1) Businesses have been required to switch to digital invoices in A) the European Union.
B) the United States.
C) countries that host the Association of Financial Professionals.
D) the home regions of cloud-based companies.
Q2) Virtual currency is a medium of exchange that operates like a currency in some environments. In other words, more precisely, virtual currency is A) digital money.
B) coins and bills.
C) checks, notes, and other negotiable instruments in paper form.
D) all of the choices.
Q3) Apple Pay and other phone-based payment systems enable mobile devices to A) link from a digital wallet to another app within a single phone.
B) entail more security risks than carrying a physical wallet.
C) communicate wirelessly with point-of-sale systems.
D) work with existing magnetic-strip credit-card machines.
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Chapter 57: Creditors Rights and Bankruptcy
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Q1) Ben defaults on his debt to Credit Loan Company. The creditor obtains a judgment against Ben, who immediately moves to another state. Generally, the judgment will be
A) honored in other states.
B) enforced only in the state in which it was obtained.
C) appealed.
D) revoked.
Q2) Lonny borrows funds through the U.S. Department of Education (DOE) to pay for his education. He defaults on the loan. DOE
A) can keep the debtor's tax refund.
B) may garnish the debtor's paycheck without a court order.
C) might take the debtor's federal benefits.
D) any of the choices.
Q3) Maria borrows funds through the U.S. Department of Education (DOE) to pay for her education. She defaults on the loan. In some states
A) any of the choices.
B) a lien can be placed on the debtor's real property to pay the debt.
C) the debt can be collected by garnishment of the debtor's bank account.
D) the debtor's professional license can be revoked.
To view all questions and flashcards with answers, click on the resource link above.
Page 59
Chapter 58: Agency and Employment
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12 Verified Questions
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Source URL: https://quizplus.com/quiz/22620
Sample Questions
Q1) Nadia, an employee of Omar in Saudi Arabia, engages in a wrongful act without Omar's knowledge or consent. Under the principles of sharia law, responsibility for Nadia's act lies with
A) only Nadia.
B) only Omar.
C) Nadia and vicariously-by extension-to Omar.
D) neither Nadia nor Omar.
Q2) In Pakistan, Mohammad, an employee of Noor, enters into a contract with Hassan. Under the principles of sharia law, liability for any breach of the contract may lie with Noor
A) in all circumstances.
B) if Hassan was aware of Mohammad's employee status.
C) if Mohammad entered into the contract on Noor's direct order.
D) under no circumstances.
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.
To view all questions and flashcards with answers, click on the resource link above. Page 60
Chapter 59: Business Organizations
Source URL: https://quizplus.com/quiz/22621
Sample Questions
Q1) 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.
Q2) 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.
Q3) 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.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 60: Government Regulation
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Source URL: https://quizplus.com/quiz/22622
Sample Questions
Q1) The Federal Communications Commission issues a rule that requires broadband Internet service providers (ISPs) to transmit data files equally, without considering their size or source. Based on previous attempts to regulate ISPs, under the Telecommunications Act of 1996, this rule would most likely be
A) challenged and overturned.
B) challenged and upheld.
C) not challenged, but repealed.
D) not challenged and strictly enforced.
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.
To view all questions and flashcards with answers, click on the resource link above.
Chapter 61: Property and Its Protection
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Source URL: https://quizplus.com/quiz/22623
Sample Questions
Q1) Kevin and Laura are married. Together, they buy a virtual asteroid near the virtual planet Magellan in the virtual NightSky universe. In the event of a divorce, to avoid property division issues with respect to the asteroid, this couple
A) can use a pre-nuptial agreement or an addenda to it.
B) cannot split their interests in the asteroid or any virtual property.
C) must surrender their rights in the asteroid to the creators of NightSky.
D) must abandon their rights in the asteroid to other virtual property owners in the NightSky universe.
Q2) Kim and Larry own Moe's, a successful restaurant. Kim, who is married, asks Larry, her unmarried partner, to convert Moe's to a limited liability company and agree that each has the right to buy the other's interest to keep control of the business. In terms of Kim's spouse and Larry's future spouse, this agreement is A) illegal and unethical.
B) illegal, but not unethical.
C) legal, but unethical.
D) legal and ethical.
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