Deck 10: The Legal Environment

Question 1

A/an ______ is an action that is excessively costly, extensive, substantial, or disruptive, or that would fundamentally alter the nature or operation of the business.

A) hardship
B) undue hardship
C) economic hardship
D) financial hardship

Answer 1

B

Question 2

Arco Advertising employs two individuals who are confined to wheelchairs. The company is required by the Americans with Disabilities Act to provide modifications of the work environment, such as wheelchair ramps, making it possible for the disabled workers to enjoy equal employment opportunities. These modifications are referred to as ______.

A) undue hardship
B) reasonable hardship
C) reasonable accommodation
D) undue modification

Answer 2

C

Question 3

Which of the following is the act that was passed in 1938 to regulate worker's pay?

A) Fair Labor Standards Act
B) Worker's Compensation Act
C) Civil Rights Act
D) Americans with Disabilities Act

Answer 3

A

Question 4

______ tries to discourage illegal immigration into the United States by denying employment to aliens and extends coverage of the 1964 Civil Rights Act to foreign-sounding or foreign-looking individuals.

A) The Civil Rights Act of 1991
B) The Americans with Disabilities Act of 1990
C) The Immigration Reform and Control Act of 1986
D) The Civil Rights Act of 1964

Question 5

______ prevents discrimination based on gender, race, color, religion, or national origin in any terms, conditions, or privileges of employment.

A) The Civil Rights Act of 1991
B) The Equality Act
C) The Equal Rights Act of 1965
D) The Civil Rights Act of 1964

Question 6

Workers' compensation is insurance that provides replacement income and medical expenses to workers who suffer ______.

A) work-related injury
B) underemployment
C) discrimination
D) silently

Question 7

Costs of workers' compensation to businesses are ______.

A) declining
B) soaring
C) holding constant
D) irrelevant since they are paid by employees

Question 8

The Civil Rights Act of 1991 places the burden of proof on ______.

A) the court system
B) the employee
C) the employer
D) the public

Question 9

Most small business problems are split between ______ and ______.

A) expenses; revenue
B) costs; regulations
C) day; night
D) employees; location

Question 10

______ is the practice of using different cutoff test scores for different groups.

A) Score norming
B) Race norming
C) Group norming
D) Job norming

Question 11

The Civil Rights Act of 1964 prevents discrimination on all of the following grounds except ______.

A) sex
B) race
C) national origin
D) pregnancy

Question 12

Workers' compensation premiums are based on two major factors: ______ and ______.

A) annual revenue; number of employees
B) industry classification; tax bracket
C) state business is located; payroll
D) industry classification; payroll

Question 13

Which of the following may an employer do under the Americans with Disabilities Act?

A) question applicants about the severity, nature, or origin of a known disability
B) refuse employment due to the employee needing special accommodation
C) require drug tests at any time in the employment process
D) require medical or physical exams prior to a conditional offer of employment

Question 14

The act of keeping prices artificially high is referred to as ______.

A) monopoly
B) collusion
C) zoning
D) antitrust

Question 15

According to the U.S. Department of Commerce, about how much do U.S. businesses lose annually to the counterfeiting of trademarked and copyrighted products?

A) $2 million
B) $20 million
C) $200 billion
D) $2 billion

Question 16

The best time for a small business to get a lawyer is ______.

A) when the business is in trouble
B) during court hearings
C) when writing the business plan
D) while the business is still an idea

Question 17

Which of the following acts was written to prevent large businesses from forming trusts?

A) Clayton Act
B) Federal Trade Commission Act
C) Fair Debt Collection Practices Act
D) Civil Rights Act of 1964

Question 18

______ are available to aid businesses with Americans with Disabilities Act compliance.

A) Grants
B) Loans
C) Tax incentives
D) Federal funds

Question 19

The Americans with Disabilities Act was passed to guarantee individuals with disabilities all but which of the following rights?

A) the right to obtain and hold a job
B) the right to travel on public transportation
C) the right to use of telecommunication services
D) the right to purchase handicap-operated vehicles

Question 20

Which title under the Americans with Disabilities Act requires all businesses serving the public to make their facilities and services accessible to the disabled?

A) Title V
B) Title VI
C) Title VII
D) Title III

Question 21

The reorganization plan under Chapter 11 bankruptcy protects the filer from which of the following?

A) foreclosure
B) liquidation
C) paying creditors
D) credit report damage

Question 22

Which percentage of all bankruptcy filings are filed under Chapter 13?

A) 3 percent
B) 10 percent
C) 18 percent
D) 25 percent

Question 23

The Occupational Safety and Health Administration is the ______ branch that the Occupational Safety and Health Act created.

A) enforcement
B) research center
C) enforcement review board
D) information service

Question 24

OSHA requires most employers with ______ or more employees to keep records of occupational injuries and illnesses.

A) 3
B) 8
C) 11
D) 50

Question 25

______ laws are used to control parking, waste disposal, and sign size and placement.

A) Property
B) Zoning
C) Enhancement
D) Land use

Question 26

Which of the following individuals are entitled to unemployment compensation?

A) Sandy, who quit her job voluntarily
B) Lonnie, who was fired for lying to his boss
C) Wilbert, who was caught stealing
D) Donna, who was laid off from her job for two months

Question 27

Alexis is looking to open her own business, and she wants to research the local and county requirements for obtaining permits and licenses. Which of the following would be a good resource to consult?

A) the CIA
B) an immigration attorney
C) federal government officials
D) her local chamber of commerce

Question 28

A land buyer interested in beginning a small business should be certain how a piece of property is ______ before buying the land.

A) subdivided
B) supplied with utilities
C) zoned
D) accessed

Question 29

Which of the following methods of bankruptcy would be best for a business that has no hope of getting out of its financial indebtedness?

A) Chapter 7
B) Chapter 12
C) Chapter 13
D) Chapter 11

Question 30

As an employer, you have all but which of the following choices if cited for a violation by the Occupational Safety and Health Administration?

A) appeal the penalties
B) seek a variance
C) correct the violation
D) choose to ignore the citation

Question 31

______ laws control what a business can sell and where it can operate.

A) Access
B) Sales
C) Subdividing
D) Zoning

Question 32

Which of the following is not a contract that must be in writing to be enforceable?

A) sale of real estate
B) contracts paying someone else's debt
C) contracts taking less than one year to perform
D) contracts involving sales of goods valued at $500 or more

Question 33

In some cases, local zoning commissions may grant a/an ______, which allows businesses to operate without complying with the regulation or without having the regulation be changed.

A) variance
B) eurozone
C) restriction
D) breach of contract

Question 34

For businesses with fewer than ______ fulltime employees, there is no health insurance requirement, according to the Health Care Reform Act.

A) 10
B) 50
C) 30
D) 100

Question 35

______ was passed to try to ensure every working man and woman in the nation safe and healthful working conditions and to preserve human resources.

A) OSHAW
B) NIOSH
C) The Occupational Safety and Health Act of 1970
D) The Workers Compensation Act of 1976

Question 36

Bankruptcy remains on a credit report for how many years?

A) three years
B) five years
C) seven years
D) nine years

Question 37

Which percentage of all bankruptcy filings are filed under Chapter 11?

A) 3 percent
B) 5 percent
C) 7 percent
D) 9 percent

Question 38

The Bankruptcy Abuse Prevention and Consumer Protection Act requires a comparison of the debtor's income to the ______.

A) median income in the individual's home state
B) median national income
C) 75th percentile of median income in the individual's home state
D) 25th percentile of median national income

Question 39

Bankruptcy accomplishes two different objectives. These objectives are which of the following?

A) liquidation and termination
B) insolvency and termination
C) insolvency and reorganization
D) liquidation and reorganization

Question 40

Which of the following methods of bankruptcy would be best for a business that still has some hope of being financially successful?

A) Chapter 7
B) Chapter 11
C) Chapter 12
D) Chapter 13

Question 41

______ is a broad term that refers to the product of some type of unique human thought.

A) Copyright
B) Patent property
C) Intellectual property
D) Trademark

Question 42

A/an ______ states that the previous business owner will not start or own a similar business within a specific geographic area for a certain amount of time.

A) competition contract
B) closed contract
C) noncompete covenant
D) open covenant

Question 43

A door-to-door saleswoman approaches Samantha, a high school student, and tries to pressure her into purchasing a line of cosmetics. Samantha tells the saleswoman that she must first consult with her parents. The saleswoman has violated which element of a contract?

A) legality
B) agreement
C) consideration
D) capacity

Question 44

The consideration element of a contract states that ______.

A) a contract must be intended to accomplish a legal purpose
B) a contract must include a legitimate offer and a legitimate acceptance
C) something of value must be exchanged between the two parties
D) the parties entering into a contract must have the capacity to do so

Question 45

The capacity element of a contract states that ______.

A) a contract must be intended to accomplish a legal purpose
B) a contract must include a legitimate offer and a legitimate acceptance
C) something of value must be exchanged between the two parties
D) the parties entering into a contract must have the capacity to do so

Question 46

A/an ______ looks for existing patents or inventions that are or may be similar to another product.

A) patent application
B) patent search
C) idea search
D) invention search

Question 47

Alice and Bonnie are finalizing negotiations for the sale of Alice's hair salon. Near the end of the conversation, Bonnie tells Alice, "You have a deal!" This constitutes which element of a contract?

A) legality
B) agreement
C) consideration
D) capacity

Question 48

______ is money awarded by the courts to a party of the contract who has suffered a loss due to the actions of another party.

A) Injunction
B) Specific performance
C) Compensatory damage
D) Breach of contract

Question 49

John and Robert have been working together for the last three years on building a prototype for a new type of hand glider that has modified wings allowing for longer flights. What type of patent should they obtain?

A) design patent
B) utility patent
C) plant patent
D) trademark patent

Question 50

Sinead is an up-and-coming folk singer who just recorded her first solo album on a relatively obscure record label. To protect her music from illegal and unauthorized use, which of these should Sinead pursue?

A) patent
B) copyright
C) trademark
D) IPO

Question 51

Which of the following is not one of the four basic conditions or elements that a contract must meet in order to be binding?

A) legality
B) agreement
C) capacity
D) formal documentation

Question 52

A/an ______ is a registered and protected brand.

A) parent corporation
B) symbol
C) trademark
D) IPO

Question 53

The ______ patent protects unique or new forms or shapes of a product.

A) utility
B) design
C) plant
D) novelty

Question 54

______ is a nonmonetary award granted by the courts to a party of the contract who has suffered a loss due to the actions of another party.

A) Injunction
B) Specific performance
C) Compensatory damage
D) Breach of contract

Question 55

______ is a violation of one or more terms of a contract by a party involved in the contract.

A) Injunction
B) Specific performance
C) Compensatory damage
D) Breach of contract

Question 56

The ______ patent covers living plants that can be grown or reproduced.

A) utility
B) design
C) plant
D) novelty

Question 57

The agreement element of a contract states that ______.

A) a contract must be intended to accomplish a legal purpose
B) a contract must include a legitimate offer and a legitimate acceptance
C) something of value must be exchanged between the two parties
D) the parties entering into a contract must have the capacity to do so

Question 58

The legality element of a contract states that ______.

A) a contract must be intended to accomplish a legal purpose
B) a contract must include a legitimate offer and a legitimate acceptance
C) something of value must be exchanged between the two parties
D) the parties entering into a contract must have the capacity to do so.

Question 59

The ______ patent covers inventions that are unique or have new uses or functions.

A) utility
B) design
C) plant
D) novelty

Question 60

A/an ______ is a court order that prohibits certain activities.

A) injunction
B) specific performance
C) compensatory damage
D) breach of contract

Question 61

The trends for small businesses in the United States from 1980 to 2003 show the greatest increase in the number of ______.

A) partnerships
B) public corporations
C) very small businesses
D) private corporations

Question 62

Scenario 10-1. Franky's Lumber Yard works with primarily small construction companies building family homes. Franky has a serious cash flow problem. She has many customers with account balances over 90 days past due. Furthermore, the economy has been growing rapidly and interest rates have just been raised. New home construction is likely to dramatically decrease. This will make it even more difficult for her customers to pay their bills. Owing in large part to the expense of her inventory and her uncollected accounts receivable, it is highly likely Franky is insolvent.

-In Scenario 10-1, which bankruptcy filing would keep creditors from foreclosing on debts during the reorganization period while including a repayment schedule for current creditors with a plan for operating more profitably in the future?

A) Chapter 7
B) Chapter 11
C) Chapter 13
D) Chapter 22

Question 63

The following are advantages of which form of business ownership: complete control over the business, few legal requirements and restrictions, and taxed as a single entity?

A) sole proprietorship
B) partnership
C) corporation
D) joint venture

Question 64

Which of the following is the most common form of business ownership?

A) sole proprietorships
B) partnerships
C) corporations
D) joint ventures

Question 65

Scenario 10-2. Kimberly is the mother of three small children, ages four, three, and one. After hours of picking up small toys, she has come up with a wonderful idea. Her new machine would be somewhat like a vacuum cleaner in that it would pick up toys. However, it would have a very large opening so that all toys would fit, within reason. This new machine would then sort the toys according to size and weight into a compartment attached to the machine. Kimberly sees this as a way to reduce hours of time for mothers and day care centers

-In Scenario 10-2, which of the following types of patents should Kimberly choose?

A) utility patent
B) design patent
C) plant patent
D) form patent

Question 66

Scenario 10-2. Kimberly is the mother of three small children, ages four, three, and one. After hours of picking up small toys, she has come up with a wonderful idea. Her new machine would be somewhat like a vacuum cleaner in that it would pick up toys. However, it would have a very large opening so that all toys would fit, within reason. This new machine would then sort the toys according to size and weight into a compartment attached to the machine. Kimberly sees this as a way to reduce hours of time for mothers and day care centers

-In Scenario 10-2, Kimberly's invention would pass all but which of the following patent tests?

A) Is it useful?
B) Is it novel?
C) Is it a machine, process, manufacture, chemical composition, or a combination?
D) Is it producing new or unexpected results?

Question 67

Scenario 10-2. Kimberly is the mother of three small children, ages four, three, and one. After hours of picking up small toys, she has come up with a wonderful idea. Her new machine would be somewhat like a vacuum cleaner in that it would pick up toys. However, it would have a very large opening so that all toys would fit, within reason. This new machine would then sort the toys according to size and weight into a compartment attached to the machine. Kimberly sees this as a way to reduce hours of time for mothers and day care centers

-In Scenario 10-2, Kimberly registers the name for her invention, Kimberly's Kid PickerUpper. The name now falls into which of the following categories?

A) brand
B) trademark
C) copyright
D) family brand

Question 68

Which form of business ownership grew most rapidly from 1980 to 2006 as evidenced by the number of business tax returns filed?

A) sole proprietorships
B) partnerships
C) corporations
D) mergers

Question 69

Which form of business ownership is the single best form in which to organize a small business?

A) sole proprietorships
B) partnerships
C) corporations
D) there is no single best form

Question 70

Which form of business organization is easiest to open and easiest to close?

A) partnership
B) sole proprietorship
C) corporation
D) a public company

Question 71

Les, a certified public accountant, is looking to open a new accounting firm. Previously, Les was part-owner of a firm where he fought regularly with other co-owners about management decisions. If he wants to avoid such conflicts and promote independence, which of these should he choose?

A) sole proprietorship
B) partnership
C) corporation
D) a public company

Question 72

Scenario 10-2. Kimberly is the mother of three small children, ages four, three, and one. After hours of picking up small toys, she has come up with a wonderful idea. Her new machine would be somewhat like a vacuum cleaner in that it would pick up toys. However, it would have a very large opening so that all toys would fit, within reason. This new machine would then sort the toys according to size and weight into a compartment attached to the machine. Kimberly sees this as a way to reduce hours of time for mothers and day care centers

-In Scenario 10-2, for what time period would a patent protect Kimberly's invention?

A) 5 years
B) 10 years
C) 17 years
D) 25 years

Question 73

The tax advantage for sole proprietorships does not last forever. The businessperson must make money in order to be considered a business. Money must be made for how many years in order to be considered a business and not a hobby by the IRS?

A) two out of five years
B) three out of five years
C) four out of five years
D) four out of six years

Question 74

Scenario 10-1. Franky's Lumber Yard works with primarily small construction companies building family homes. Franky has a serious cash flow problem. She has many customers with account balances over 90 days past due. Furthermore, the economy has been growing rapidly and interest rates have just been raised. New home construction is likely to dramatically decrease. This will make it even more difficult for her customers to pay their bills. Owing in large part to the expense of her inventory and her uncollected accounts receivable, it is highly likely Franky is insolvent.

-In Scenario 10-1, what number of bankruptcy filings occur under Chapter 7?

A) two out of four
B) three out of four
C) two out of three
D) four out of eight

Question 75

The three forms of business ownership include all but which of the following?

A) sole proprietorships
B) partnerships
C) corporations
D) joint ventures

Question 76

Scenario 10-1. Franky's Lumber Yard works with primarily small construction companies building family homes. Franky has a serious cash flow problem. She has many customers with account balances over 90 days past due. Furthermore, the economy has been growing rapidly and interest rates have just been raised. New home construction is likely to dramatically decrease. This will make it even more difficult for her customers to pay their bills. Owing in large part to the expense of her inventory and her uncollected accounts receivable, it is highly likely Franky is insolvent.

-In Scenario 10-1, which bankruptcy filing would allow Franky to pay back creditors over a three- to five-year period?

A) Chapter 7
B) Chapter 11
C) Chapter 13
D) Chapter 22

Question 77

Scenario 10-2. Kimberly is the mother of three small children, ages four, three, and one. After hours of picking up small toys, she has come up with a wonderful idea. Her new machine would be somewhat like a vacuum cleaner in that it would pick up toys. However, it would have a very large opening so that all toys would fit, within reason. This new machine would then sort the toys according to size and weight into a compartment attached to the machine. Kimberly sees this as a way to reduce hours of time for mothers and day care centers

-In Scenario 10-2, in order to protect this new idea from her competition, Kimberly should apply for a ______.

A) patent
B) trademark
C) brand name
D) copyright

Question 78

Which of the following forms of business ownership brings in the most business-generated revenue?

A) sole proprietorships
B) partnerships
C) corporations
D) acquisitions

Question 79

Scenario 10-1. Franky's Lumber Yard works with primarily small construction companies building family homes. Franky has a serious cash flow problem. She has many customers with account balances over 90 days past due. Furthermore, the economy has been growing rapidly and interest rates have just been raised. New home construction is likely to dramatically decrease. This will make it even more difficult for her customers to pay their bills. Owing in large part to the expense of her inventory and her uncollected accounts receivable, it is highly likely Franky is insolvent.

-In Scenario 10-1, if Franky files for a Chapter 7 bankruptcy, then ______ will occur.

A) voluntary reorganization
B) involuntary reorganization
C) liquidation
D) repayment over a three- to five-year period

Question 80

The single biggest disadvantage of sole proprietorships is which of the following?

A) limited resources
B) limited skills
C) unlimited liability
D) double taxation