Question 1

If you purchase $250,000 worth of insurance to protect your restaurant, with a $10,000 deductible, how much money are you entitled to receive as a payout if a fire destroys your store, which is valued at $250,000?
A) $240,000
B) $10,000
C) $250,000
D) $350,000
E) $290,000

Accepted Answer

The insurance policy will pay out the difference between the value of the restaurant ($250,000) and the deductible ($10,000), which is $240,000. So, if the restaurant is destroyed in a fire, the maximum payout would be $240,000.

Question 2

The four "A's" of a successful contract include: ________.
A) Avoid misunderstanding and assure work
B) Assure payment and avoid liability
C) Assess risk and analyze profit
D) Assume parties will abide by the contract
E) Both A and B

Accepted Answer

The four "A's" of a successful contract include both avoiding misunderstandings and assuring work, as well as assuring payment and avoiding liability. None of the other options correctly identify all four components.

Question 3

________ insurance is designed to cover in the event that a business's (its employees') failure to do something that causes harm to a customer.
A) Errors and omissions
B) Negligence
C) Product liability
D) Workers Comp
E) Flood

Accepted Answer

Errors and Omissions insurance is specifically designed to protect businesses and their employees against claims of negligence or failure to perform their professional duties, including making mistakes or omissions that cause harm to a customer.

Question 4

The time period in which legal action may be taken is the ________.
A) Statute of limitations
B) Statute of legal obligations
C) Limit of liability
D) Limit of collection
E) None of the above

Accepted Answer

The statute of limitations is the time period during which a legal action must be taken. After that time period, the right to take legal action may be lost.

Question 5

Some contracts specify that conflicts may be settled through ________ instead of court.
A) Arbitration
B) Negotiation
C) Coercion
D) Litigation
E) None of the above

Accepted Answer

Some contracts may specify that disputes or conflicts should be settled through arbitration instead of court. Arbitration is a dispute resolution process in which an impartial third party (an arbitrator or a panel of arbitrators) is chosen by both parties to make a binding decision on the matter. It is often seen as a faster and less expensive alternative to litigation.

Question 6

The number of stockholders in a Subchapter S Corporation is limited to ________.
A) 100
B) 50
C) 250
D) 12
E) 25

Accepted Answer

The number of stockholders in a Subchapter S Corporation is limited to 100. This is one of the requirements to qualify for Subchapter S status, which allows the corporation to avoid paying federal income tax on its profits.

Question 7

Infringement of intellectual property is ________.
A) A crime
B) Profitable
C) A business tactic
D) Commonplace
E) Acceptable

Accepted Answer

Infringement of intellectual property is considered a crime as it involves the unauthorized use of someone else's intellectual property, which is protected by law.

Question 8

An injured party whose rights in a contract have been breached can bring a ________ against the other party.
A) Lawsuit
B) Motion
C) Mediation
D) Judgment
E) Claim

Accepted Answer

An injured party whose rights in a contract have been breached can bring a lawsuit against the other party to seek legal remedy for the damages suffered.

Question 9

________ protects people from having property or wealth stolen, lost, or destroyed. There are many kinds, and in order to purchase it you pay a monthly, quarterly, or annual ________.
A) Insurance, premium
B) Insurance, dividend
C) Insurance, carrying cost
D) Protection, dividend
E) Coverage, carrying cost

Accepted Answer

Protection from property loss or damage is provided by insurance. The payment made for coverage is called a premium, which can be made monthly, quarterly, or annually. Dividend and carrying cost are not relevant terms in this context. Similarly, protection and coverage are interchangeable terms in this context, but insurance is the more appropriate and widely-used term.

Question 10

A good contract will spell out ________, or unforeseeable "acts of God" beyond anyone's control, for which neither party is responsible.
A) Contingencies
B) Liabilities
C) Amendments
D) Alterations
E) Modifications

Accepted Answer

Contingencies refer to unexpected events or circumstances that may impact the contract. Unforeseeable "acts of God" are considered contingencies and a good contract will have a clear plan of action in case they occur. Liabilities, amendments, alterations, and modifications are all related to changes or responsibilities within the contract and do not specifically address unforeseeable events beyond anyone's control.

Question 11

The form of protection offered under U.S. law to the authors of "original works of authorship" is a(n) ________.
A) Copyright
B) Electronic right
C) Patent
D) Right
E) Charter

Accepted Answer

The form of protection offered under U.S. law to the authors of "original works of authorship" is a copyright. This gives the author exclusive rights to use and distribute their work for a limited period of time.

Question 12

A low deductible will yield a ________.
A) Higher premium
B) Lower premium
C) The deductible has no impact on the premium.
D) Disaster
E) Savings in all cases

Accepted Answer

A low deductible means that the insurance company will have to pay more in the event of a claim, and therefore they will charge a higher premium to offset this risk.

Question 13

Federal, state and local ________ may apply to a business and may affect what it can do, how it can do it, and when and where it can operate.
A) Regulations
B) Grants
C) Taxes
D) All of the above
E) None of the above

Accepted Answer

Regulations are rules and standards set by government agencies that businesses must follow in order to operate legally. This can include requirements for safety, health, environmental protection, and more. Grants and taxes are not necessarily applicable to all businesses, while regulations are universal.

Question 14

Which of the following is not necessary for a contract to be binding?
A) Signing parties must have their signatures notarized.
B) Signing parties must exchange something of value or agree not to do something they are legally entitled to do.
C) Both parties must sign the contract.
D) Witnesses must be present.
E) All of the above

Accepted Answer

The answer of Which of the following is not necessary...

Question 15

In a corporation, all profits go to ________.
A) The owners and the shareholders
B) Reduce the surplus
C) The stockholders as salaries
D) The partners according to the terms of the agreement
E) Friends and family

Accepted Answer

In a corporation, profits belong to the owners and shareholders who have invested money into the company. As owners of the company, they are entitled to reap the benefits of any profits the company generates.

Question 16

________ are the building blocks of business.
A) Contracts
B) Personal relationships
C) Letters of agreements
D) Networks
E) Loans

Accepted Answer

Contracts are the building blocks of business because they create legally binding agreements between parties.

Question 17

You do not need a patent unless you ________.
A) Believe that someone else could successfully sell the product by copying your invention
B) Have invented a product that you intend to market yourself or sell to a manufacturer
C) Both A and B
D) Want to get sued
E) None of the above

Accepted Answer

A patent is only necessary if you believe that someone else could copy your invention and sell it successfully or if you intend to market or sell the invention yourself or to a manufacturer. Thus, both options A and B are correct. Option D is incorrect as no one wants to get sued, and option E is incorrect as the correct choice is C.

Question 18

What is used to identify and distinguish the source of a service rather than a product?
A) Service mark
B) Trademark
C) Sales mark
D) All of the above
E) None of the above

Accepted Answer

A service mark is specifically used to identify and distinguish the source of a service, whereas a trademark is used to identify and distinguish the source of a product. "Sales mark" is not a commonly used term in the realm of intellectual property.

Question 19

The main disadvantage of corporations is that corporate income is ________.
A) Taxed twice
B) Always high
C) Taxed only once
D) All of the above
E) None of the above

Accepted Answer

Corporate income is taxed at the corporate level as well as at the individual level when shareholders receive dividends, resulting in double taxation. This can lead to a lower net income for shareholders and discourage investment in corporations.

Question 20

Obtain a trademark in order to ________.
A) Protect your logo
B) Protect all your intellectual property
C) Register your business name
D) Pay your taxes
E) Get new customers

Accepted Answer

Obtaining a trademark is primarily done to protect your logo or other recognizable symbol associated with your brand from being used by others without your permission. It does not necessarily protect other forms of intellectual property, register your business name, pay your taxes, or directly result in gaining new customers.

Quiz 16: Addressing Legal Issues and Managing Risk

If you purchase $250,000 worth of insurance to protect your restaurant, with a $10,000 deductible, how much money are you entitled to receive as a payout if a fire destroys your store, which is valued at $250,000?

The four "A's" of a successful contract include: ________.

________ insurance is designed to cover in the event that a business's (its employees') failure to do something that causes harm to a customer.

The time period in which legal action may be taken is the ________.

Some contracts specify that conflicts may be settled through ________ instead of court.

The number of stockholders in a Subchapter S Corporation is limited to ________.

Infringement of intellectual property is ________.

An injured party whose rights in a contract have been breached can bring a ________ against the other party.

protects people from having property or wealth stolen, lost, or destroyed. There are many kinds, and in order to purchase it you pay a monthly, quarterly, or annual .

A good contract will spell out ________, or unforeseeable "acts of God" beyond anyone's control, for which neither party is responsible.

The form of protection offered under U.S. law to the authors of "original works of authorship" is a(n) ________.

A low deductible will yield a ________.

Federal, state and local ________ may apply to a business and may affect what it can do, how it can do it, and when and where it can operate.

Which of the following is not necessary for a contract to be binding?

In a corporation, all profits go to ________.

________ are the building blocks of business.

You do not need a patent unless you ________.

What is used to identify and distinguish the source of a service rather than a product?

The main disadvantage of corporations is that corporate income is ________.

Obtain a trademark in order to ________.