Deck 16: Small Business Protection: Risk Management and Insurance

Question 1

In managing risk from violation of tax regulations,small business owners should make paying taxes their first financial priority.

Answer 1

True

Question 2

Identifying risks is the first task to be completed before a comprehensive insurance program can be developed for a business.

Answer 2

True

Question 3

Risk from loss of key personnel and former employees setting up competition against your business can be managed by negotiating employment contracts with those key employees.

Answer 3

True

Question 4

Copyrights,trademarks,and patents provide automatic full protection to small business owners.

Question 5

Customers can never be a source of risk for businesses.

Question 6

Small businesses are not eligible to obtain government subsidies.

Question 7

Adverse possession occurs when an owner of real property does not enforce property rights and allows a non-owner to use the property as if it were his or her own.

Question 8

The OSHA is a commission established to enforce the provisions of the Equal Employment Opportunity Act.

Question 9

The ADA Technical Assistance Program provides inspection and affirmation services to help small businesses.

Question 10

Everyone responds differently to risk.When it comes to business risk,small business owners are mostly risk seeking rather than risk averse.

Question 11

Joint ventures are partnerships through which two or more businesses combine to undertake a specific economic activity.

Question 12

Business interruption insurance provides funds to pay the ordinary operating expenses of your business if it is forced to close temporarily because of an insured event.

Question 13

Employees whose experience and skills are critical to the success of a business are called key employees.

Question 14

All businesses within an industry have to pay the same amount,as decided by the state,as unemployment insurance.

Question 15

The most common form of employee theft is the pilfering of items of small value.

Question 16

Surety bonds repay employers for losses caused by dishonest or negligent employees.

Question 17

Contractual provisions of insurance policies that specify what risks the insurance company is assuming are called coverages.

Question 18

Business risk is the probability that the future state of the business will be better than planned.

Question 19

Managing risks to tools,equipment,inventory,and other physical assets is largely a function of developing and enforcing appropriate business policies and procedures.

Question 20

The advantage of legal protection methods for intellectual property is that there are multiple government agencies in each area that will assist a small business owner in maintaining their legal rights.

Question 21

If a risk-averse small business owner can't reduce the level of risk to where they are comfortable,they can either insure against future losses or ________.

A) spread the risk among other people or businesses
B) ignore regulatory changes and enforcement
C) choose a source of capital investment
D) prepare to declare bankruptcy in the case of a natural disaster

Question 22

Today the biggest risk to most businesses comes from _____.

A) employees
B) using computers
C) customers
D) key employees

Question 23

Ted,a 46-year-old IT professional,recently attended a job interview at Acton Org.He was not offered the job.Ted tried to find the reasons for his disqualification and the company could not provide a satisfactory explanation.He later learned that he was refused the job due to his age as the job position was offered to a 23-year-old who had just graduated from college.Which of the following laws protect Ted from such discriminations?

A) ADA
B) OSHA laws
C) Sarbanes-Oxley Act
D) ADEA

Question 24

States of being that are expressly prohibited from suffering discrimination are called _____.

A) vulnerable groups
B) endangered sections
C) protected classes
D) ethnic majorities

Question 25

_____ are programs designed to report on a user's keystrokes or data,or give remote control of a PC to others.

A) Hubs
B) Firewalls
C) Viruses
D) Spyware

Question 26

Which of the following acts provide training for workers who are injured on the job?

A) The Age Discrimination in Employment Act of 1967
B) The Americans with Disabilities Act of 1990
C) The Civil Rights Act of 1991
D) The Rehabilitation Act of 1973

Question 27

Which of the following statements concerning business risk from customers and others is true?

A) Customer injuries suffered while upon business property may or may not be the owners fault.
B) Trespassers are not a risk as they are not legally on the business property.
C) Class action product liability suits are the most common lawsuits filed against small businesses.
D) People who file individual lawsuits against a company do not get as much money as those that join a class action suit.

Question 28

Misappropriation of business property by employees of that business is referred to as:

A) employee branding.
B) employee theft.
C) employee attrition.
D) employee engagement.

Question 29

Which of the following helps manage risks to physical assets of a business?

A) Employees should be allowed easy access of physical assets to assist them with their work.
B) Inspections should be deemed necessary only when an item is reported missing.
C) A manager's signature must be required to confirm that an item has been returned to its proper storage.
D) Only clerical-level employees need to sign for removing items from storage.

Question 30

Which of the following is a protected class established by the EEOC?

A) Age
B) Sex
C) Marital status
D) Political affiliation

Question 31

There are three general types of events that cause business risk.Which of the following is not one of those three general types of events?

A) Events related to customers and others.
B) Events related to personnel.
C) Events related to the property of the business.
D) Events related to the competitors of the business.

Question 32

Ted's business,situated near the Missouri River,was partially destroyed when the river overflowed after a deluge.Which of the following measures would've helped Ted minimize the effect of the flood from interrupting the operations of his business?

A) Creating provisions for subcontracting work
B) Developing an informal code of ethics for all employees to follow
C) Ensuring that all employees have easy access to all assets
D) Securing valuable assets from low-level employees

Question 33

Which statement concerning the loss of key employees is not true?

A) Key employees rarely become competitors.
B) The loss of a key employee may lead to bankruptcy and dissolution of the business.
C) The risk is especially acute in knowledge and service businesses.
D) If a key employee quits,retires,becomes disabled,or dies,the business faces a crisis.

Question 34

Payment for injury or damage that occurs during the use of a business's products is referred to as _____.

A) product liability
B) professional immunity
C) product immunity
D) personal liability

Question 35

The specifics of storm proofing a building depends upon the _______ of the building.

A) replacement cost
B) construction cost
C) square feet
D) geographical location

Question 36

Which one of the following government agencies was created to enforce safety in the workplace?

A) EEOC
B) OSHA
C) SBA
D) IRS

Question 37

Which of the following statements concerning compliance with government regulations is true?

A) Violation of some of the regulations is probably inevitable.
B) There are only a few rule-making government agencies.
C) Violation of government regulations is not a significant business risk.
D) The only cost of noncompliance is the time it takes to complete the necessary paperwork.

Question 38

Working proactively to ensure that your physical place of business is (1)free of potential hazards and (2)_______ will prevent on-premises injuries and violations of EEOC or OSHA rules.

A) staffed with trained employees
B) safe from environmental disaster
C) brightly lit
D) secure from intruders

Question 39

Which of the following steps would help decrease business risks?

A) Making specific plans for and arrangements to deal with foreseeable events
B) Assuming employees will follow basic workplace etiquettes without a written code of conduct
C) Ensuring employees have easy access to valuable assets
D) Having separate codes of conduct for employees at different tiers of the management

Question 40

_____ refers to laws and governmental rules that limit the freedom of business owners to manage their businesses as they please.

A) Employee branding
B) Benchmarking
C) Arraignment
D) Regulation of the workplace

Question 41

Which of the following statements is true of sharing business risk with the government?

A) Only the federal government offers programs funding risky ventures.
B) Small businesses are unable to obtain government subsidies.
C) Risk for a government is very different from risk for private business.
D) Governments have the same profit-make requirements of businesses.

Question 42

_____ refers to a set of rules and procedures that work to limit the opportunity for employee theft or malfeasance.

A) Internal audit
B) Internal control
C) Malfeasance in office
D) Insider trading

Question 43

______ occurs when the owner of real property does not enforce property rights and allows a non-owner to use the property as if it were his or her own.

A) Abandonment
B) Accession
C) Property liability
D) Adverse possession

Question 44

Which of the following is true of the ADA Technical Assistance Program?

A) It provides specific advice to a business concerning how to comply with the pertinent requirements.
B) It provides inspection of the workplace to determine compliance.
C) It provides affirmation services to all businesses.
D) It provides its services only to large businesses that have more than 500 employees.

Question 45

Which of the following should be included in an employee contract for a key employee?

A) Offer rewards for providing adequate termination notice
B) Specify that the employee must work at the organization for a minimum of two years
C) Detail the consequences of insubordination within the workplace
D) Encourage employees to poach clients from competitors

Question 46

The most common form of employee collusion is:

A) selling trade secrets to competition.
B) theft of cash and inventory.
C) lying about work hours.
D) lying about absences.

Question 47

Which of the following statements is true regarding the OSHA Act?

A) It covers employees in mining,transportation,and state and local governments.
B) OSHA offers consultation services to employers for a fee.
C) It requires businesses to report any accidents that result in a fatality or in the hospitalization of three or more employees within 24 hours.
D) OSHA-defined "low-hazard" industries are exempt from the record keeping requirements of the regulations.

Question 48

According to the 2016 Global Fraud Study submitted by the Association of Certified Fraud Examiners,what is the number one method for fraud detection?

A) Internal audits
B) Internal controls
C) Tips
D) External audits

Question 49

A type of internal control that separates the physical control of an asset from the person accounting for that asset is called _____.

A) asset liability
B) adverse possession
C) separation of duties
D) separation of liabilities

Question 50

Jacob often manipulates charges on his travel expenses to indicate higher amounts when he travels for the company he works for.Trent,the accounts manager,accepts fake bills and assists Jacob in deceiving the company.They split the profits made this way.This is an example of theft by:

A) adverse possession.
B) employee collusion.
C) employee nonfeasance.
D) vendor fraud.

Question 51

Which of the following helps limit risk from violation of tax regulations?

A) The owner should make payments to creditors by borrowing from tax money.
B) The owner should understate revenues and overstate deductible expenses.
C) The owner should take cash from the businesses before it is recorded as revenue.
D) The owner should hire an accountant and a lawyer who are expert in tax issues.

Question 52

A(n)_____ is a valuable process that can greatly help an employer with the issues of keeping risks at acceptable levels.It is strictly a management tool which is not provided to outsiders; it can be structured and conducted in any systematic manner the owner finds acceptable.

A) adverse possession
B) internal audit
C) external audit
D) internal control

Question 53

A computer program that encrypts all the data on your computer with an unknown key is called _______.If the business does not pay a specified amount,all the computer contents will be erased.

A) spyware
B) AxCrypt
C) ransomware
D) BitCoin

Question 54

Separation of duties is most important for _______.

A) intangible assets
B) staff
C) tangible assets
D) management

Question 55

Which of the following represents the problem with legal protection methods for intellectual property?

A) There is no governmental agency that will assist small business owners in maintaining their legal rights.
B) The cost of legal protection for intellectual property is so high that it is practically useless for a small business owner.
C) Legal protection methods for intellectual property are primarily "reserved" for large businesses.
D) Legal protection methods can only be offered for tangible property and not intellectual property.
E) Holding legal rights to intellectual property provides the owner solely with grounds to pursue lawsuits against infringement.

Question 56

Which of the following is true of using internal audits to manage risk?

A) Every small business owners conduct internal audits on their own.
B) Internal audits have a fixed structure decided by the government and all employers are required to comply.
C) The owner should provide sufficient authority to the auditor to ensure that he or she can accomplish the goals of the audit.
D) The owner should accept that the auditor has final authority when it comes to approving the audit plan.

Question 57

Which of the following should be undertaken in order to reduce a business's exposure to the risk of violating tax regulations?

A) Understate revenues and overstate deductible expenses
B) Reconcile the cash register tape to the cash register contents every day
C) Take cash from the businesses before it is recorded as revenue
D) Borrow from tax money in order to make payments to creditors

Question 58

Julia recently set up a factory that manufactures shoes.To ensure that her business complies with the basic OSHA regulations,which of the following steps should she take?

A) She must provide medical examinations for all her employees.
B) She must set up a system that reports any workplace accident within 72 hours.
C) She must request the Technical Assistance Program to conduct an inspection of her factory.
D) She must make her employees aware of all the EEOC rules that pertain to her business.

Question 59

Axion Inc.is a small business started by Robert.As the business grew,he decided to implement new company policies that would ensure that his employees are not encouraged to set up competition against Axion.Which of the following techniques should he adopt to achieve this?

A) Lay off employees who seem most likely to go into competition with Axion
B) Groom other candidates to replace the employees currently working at Axion
C) Cross train the employees to neutralize job specialization
D) Negotiate contracts with key employees that limit their freedom to go into competition

Question 60

Martin,an employee at a boutique store,is required to handle store displays and also ensure that all the sales records tally at the end of each business day.However,he committed fraud by recording fake sales and then keeping the products to himself.Which of the following managerial concepts would have helped the store avoid this deception?

A) Adverse possession
B) Separation of duties
C) Accession
D) Rule against perpetuities

Question 61

Crux Inc.and Synapse Inc.are two competing businesses in the same city.They use the services of the same insurance company and have taken the same policy.Crux has a higher deductible than Synapse for the policy.Which of the following statements would be true in this case?

A) Both companies are not paying any premium.
B) Synapse pays a higher premium than Crux.
C) Both the companies pay the same premium.
D) Crux pays a higher premium than Synapse.

Question 62

______ is a contract requirement that works to prevent property owners from deliberately underinsuring.

A) Benchmarking
B) Co-insurance
C) Adverse possession
D) Separation of duty

Question 63

_____ are used to pay losses that are not covered by other liability insurance.

A) Unemployment insurance
B) Worker's compensation insurance
C) General liability insurance
D) Product liability insurance

Question 64

Which of the following is true of insurance?

A) All risks are insurable.
B) An insurance company only charges a fee for large businesses with over 100 employees.
C) Insurance companies make profits by requiring a relatively large fee compared to the amount of loss that is possible.
D) The insurance company makes a profit by collecting premiums from many businesses for the same set of risks.

Question 65

Which of the following is an example of a special type of liability insurance that covers losses from harm caused during the performance of a profession?

A) Unemployment insurance
B) Errors and omissions insurance
C) Disability insurance
D) Worker's compensation insurance

Question 66

_____ insurance is normally included in insurance on physical assets.

A) Theft
B) Credit
C) Intellectual property
D) Safety

Question 67

The first task to be completed before a comprehensive insurance program for a business can be developed is:

A) to develop a financial plan.
B) to assess internal strengths.
C) to identify risks.
D) to provide a business succession plan.

Question 68

Which of the following is true of insuring the property of a business?

A) All the value of a property has insurable value.
B) The value of land is the most commonly insured property.
C) The value of the historical significance of a building often cannot be insured.
D) The lower the deductible,the lower the policy premium payments will be.

Question 69

A contract between two or more parties in which one party agrees,for a fee,to assume the risk of another is called _____.

A) coverage
B) insurance
C) separation of duties
D) bailment

Question 70

_____ are contractual provisions of insurance policies that specify what risks the insurance company is assuming.

A) Internal controls
B) Coverages
C) Separation of duties
D) Premiums

Question 71

_____ provides funds to pay the ordinary operating expenses of a business should it be forced to close temporarily because of an insured event.

A) Crime insurance
B) Theft insurance
C) Business interruption insurance
D) Product liability insurance

Question 72

Liability insurance protects a business against:

A) disgruntled former employees filing suites.
B) current employees setting up businesses which turn into competition for the organization.
C) losses incurred due to the death of a key employee.
D) claims from harm caused by inadvertent consequences of actions of the business or its employees.

Question 73

Which of the following statements is not true of using insurance to manage business risk?

A) It is possible to use insurance to avoid all types of business risk.
B) Insurance can be expensive.
C) Many small business owners choose too little insurance.
D) Carrying too much insurance wastes money.

Question 74

Fidelity bonds help to:

A) protect against losses from crimes committed against the business.
B) cover losses incurred due to governmental audits.
C) cover losses incurred by the employer due to employee embezzlement.
D) cover abnormal losses from credit customers not paying their bills.

Question 75

Which of the following is a risk specific to dentists and physicians?

A) Business interruption
B) Malpractice claims
C) Errors and omissions claims
D) Product liability claims

Question 76

Insurable value is defined as:

A) the amount of an asset for which a company will write an insurance policy.
B) the entire value of the property of a business.
C) the value of the historical significance of a building.
D) the amount of fees that a business has to pay to an insurance company.

Question 77

The computers at a graphics design company were stolen recently.Which of the following insurance that the company holds will repay the losses incurred?

A) Product liability insurance
B) Crime insurance
C) Surety bonds
D) Credit insurance

Question 78

A(n)_____ is an amount of loss that is specifically excluded by the insurance contract.

A) insurable value
B) premium
C) deductible
D) coverage

Question 79

Which of the following is true of co-insurance?

A) It is an amount of loss that is specifically excluded by the insurance contract.
B) It requires that an owner carry insurance equal to a stated minimum percentage of the market value of their property.
C) It results in the decrease of the amount of premium that the insurance company collects from businesses.
D) It is the amount of an asset for which a company will write an insurance policy.

Question 80

Which of the following is true of insurance coverages?

A) Vehicle liability insurance is mandated by the legislatures of all the states and territories of the United States.
B) Workers' compensation insurance is mandatory in all the states and territories of the United States.
C) Industries and businesses that have frequent seasonal layoffs pay lower amounts of unemployment premiums than do those that have stable employment.
D) A fixed amount of unemployment insurance is collected from all industries.