Test Questions & Answers 7e The Legal Environment Ch.10 - Small Business Competitive Advantage 7e Test Bank by Timothy S. Hatten. DOCX document preview.
Test Bank
Chapter 10: The Legal Environment
Multiple Choice
1. 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
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
2. Most small business problems are split between ______ and ______.
a. expenses; revenue
b. costs; regulations
c. day; night
d. employees; location
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
3. 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
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
4. 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
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
5. The act of keeping prices artificially high is referred to as ______.
a. monopoly
b. collusion
c. zoning
d. antitrust
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
6. 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
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
7. The Civil Rights Act of 1964 prevents discrimination on all of the following grounds except ______.
a. sex
b. race
c. national origin
d. pregnancy
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
8. ______ 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
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
9. ______ 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
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
10. 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
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
11. 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
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
12. 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
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
13. 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
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
14. ______ are available to aid businesses with Americans with Disabilities Act compliance.
a. Grants
b. Loans
c. Tax incentives
d. Federal funds
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
15. 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
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
16. ______ is the practice of using different cutoff test scores for different groups.
a. Score norming
b. Race norming
c. Group norming
d. Job norming
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
17. 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
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
18. 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
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
19. 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
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
20. Costs of workers’ compensation to businesses are ______.
a. declining
b. soaring
c. holding constant
d. irrelevant since they are paid by employees
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
21. ______ 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
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
22. 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
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
23. 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
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
24. 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
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
25. OSHA requires most employers with ______ or more employees to keep records of occupational injuries and illnesses.
a. 3
b. 8
c. 11
d. 50
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
26. 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
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
27. 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
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
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
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
29. ______ laws control what a business can sell and where it can operate.
a. Access
b. Sales
c. Subdividing
d. Zoning
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
30. ______ laws are used to control parking, waste disposal, and sign size and placement.
a. Property
b. Zoning
c. Enhancement
d. Land use
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
31. 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
KEY: Learning Objective: 10.2: List and explain the types of bankruptcy.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.2: Bankruptcy Laws
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
32. 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
KEY: Learning Objective: 10.2: List and explain the types of bankruptcy.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.2: Bankruptcy Laws
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
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
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
34. 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
KEY: Learning Objective: 10.2: List and explain the types of bankruptcy.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.2: Bankruptcy Laws
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
35. 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
KEY: Learning Objective: 10.2: List and explain the types of bankruptcy.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.2: Bankruptcy Laws
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
36. Which percentage of all bankruptcy filings are filed under Chapter 11?
a. 3 percent
b. 5 percent
c. 7 percent
d. 9 percent
KEY: Learning Objective: 10.2: List and explain the types of bankruptcy.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.2: Bankruptcy Laws
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
37. 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
KEY: Learning Objective: 10.2: List and explain the types of bankruptcy.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.2: Bankruptcy Laws
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
38. Which percentage of all bankruptcy filings are filed under Chapter 13?
a. 3 percent
b. 10 percent
c. 18 percent
d. 25 percent
KEY: Learning Objective: 10.2: List and explain the types of bankruptcy.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.2: Bankruptcy Laws
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
39. Bankruptcy remains on a credit report for how many years?
a. three years
b. five years
c. seven years
d. nine years
KEY: Learning Objective: 10.2: List and explain the types of bankruptcy.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.2: Bankruptcy Laws
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
40. 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
KEY: Learning Objective: 10.3: Describe the elements of a contract.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.3: Contract Law For Small Businesses
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
41. 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
KEY: Learning Objective: 10.3: Describe the elements of a contract.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.3: Contract Law For Small Businesses
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
42. 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.
KEY: Learning Objective: 10.3: Describe the elements of a contract.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.3: Contract Law For Small Businesses
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
43. 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
KEY: Learning Objective: 10.3: Describe the elements of a contract.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.3: Contract Law For Small Businesses
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
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
KEY: Learning Objective: 10.3: Describe the elements of a contract.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.3: Contract Law For Small Businesses
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
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
KEY: Learning Objective: 10.3: Describe the elements of a contract.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.3: Contract Law For Small Businesses
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
46. ______ 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
KEY: Learning Objective: 10.3: Describe the elements of a contract.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.3: Contract Law For Small Businesses
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
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
KEY: Learning Objective: 10.3: Describe the elements of a contract.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.3: Contract Law For Small Businesses
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
48. 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
KEY: Learning Objective: 10.3: Describe the elements of a contract.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.3: Contract Law For Small Businesses
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
49. 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
KEY: Learning Objective: 10.3: Describe the elements of a contract.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.3: Contract Law For Small Businesses
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
50. ______ 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
KEY: Learning Objective: 10.3: Describe the elements of a contract.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.3: Contract Law For Small Businesses
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
51. A/an ______ is a court order that prohibits certain activities.
a. injunction
b. specific performance
c. compensatory damage
d. breach of contract
KEY: Learning Objective: 10.3: Describe the elements of a contract.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.3: Contract Law For Small Businesses
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
52. ______ 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
KEY: Learning Objective: 10.3: Describe the elements of a contract.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.3: Contract Law For Small Businesses
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
53. The ______ patent covers inventions that are unique or have new uses or functions.
a. utility
b. design
c. plant
d. novelty
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.4: Laws to Protect Intellectual Property
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
54. The ______ patent protects unique or new forms or shapes of a product.
a. utility
b. design
c. plant
d. novelty
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.4: Laws to Protect Intellectual Property
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
55. ______ 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
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.4: Laws to Protect Intellectual Property
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
56. 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
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.4: Laws to Protect Intellectual Property
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
57. The ______ patent covers living plants that can be grown or reproduced.
a. utility
b. design
c. plant
d. novelty
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.4: Laws to Protect Intellectual Property
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
58. 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
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.4: Laws to Protect Intellectual Property
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
59. 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
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.4: Laws to Protect Intellectual Property
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
60. A/an ______ is a registered and protected brand.
a. parent corporation
b. symbol
c. trademark
d. IPO
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.4: Laws to Protect Intellectual Property
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
NARRBEGIN: 10-1
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.
NARREND
61. 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
KEY: Learning Objective: 10.2: List and explain the types of bankruptcy.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 10.2: Bankruptcy Laws
Difficulty Level: Easy
TOP: AACSB Standard: Reflective thinking
NAR: 10-1
62. 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
KEY: Learning Objective: 10.2: List and explain the types of bankruptcy.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 10.2: Bankruptcy Laws
Difficulty Level: Easy
TOP: AACSB Standard: Reflective thinking
NAR: 10-1
63. 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
KEY: Learning Objective: 10.2: List and explain the types of bankruptcy.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 10.2: Bankruptcy Laws
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
NAR: 10-1
64. 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
KEY: Learning Objective: 10.2: List and explain the types of bankruptcy.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 10.2: Bankruptcy Laws
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
NAR: 10-1
NARRBEGIN: 10-2
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.
NARREND
65. 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
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 10.4: Laws to Protect Intellectual Property
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
NAR: 10-2
66. 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
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 10.4: Laws to Protect Intellectual Property
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
NAR: 10-2
67. 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
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 10.4: Laws to Protect Intellectual Property
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
NAR: 10-2
68. 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?
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module: 10.4 Laws to Protect Intellectual Property
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
NAR: 10-2
69. 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
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 10.4: Laws to Protect Intellectual Property
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
NAR: 10-2
70. The three forms of business ownership include all but which of the following?
a. sole proprietorships
b. partnerships
c. corporations
d. joint ventures
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
71. Which of the following is the most common form of business ownership?
a. sole proprietorships
b. partnerships
c. corporations
d. joint ventures
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
72. Which of the following forms of business ownership brings in the most business-generated revenue?
a. sole proprietorships
b. partnerships
c. corporations
d. acquisitions
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
73. 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
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
74. 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
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
75. 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
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
76. 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
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
77. 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
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
78. Which form of business organization is easiest to open and easiest to close?
a. partnership
b. sole proprietorship
c. corporation
d. a public company
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
79. 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
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
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
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
81. Which disadvantage of sole proprietorships centers around the fact that capital is difficult to raise?
a. limited resources
b. limited skills
c. unlimited liability
d. lack of continuity
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
82. Which of the following is created to complete a specified purpose and is limited in duration?
a. sole proprietorship
b. joint venture
c. C corporation
d. S corporation
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
83. The following are advantages of which form of business ownership: pooled talent, pooled resources, easy to form, and tax advantages?
a. sole proprietorships
b. partnerships
c. corporations
d. acquisitions
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
84. A business structure in which the business owners share the management and all of the risk of a business is called a ______.
a. sole proprietorship
b. general partnership
c. limited partnership
d. corporation
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
85. The following are disadvantages of which form of business ownership: unlimited liability, management conflict potential, and less independence?
a. sole proprietorships
b. partnerships
c. corporations
d. mergers
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
86. Alice is co-owner of a company where she has unlimited liability. However, there are three additional co-owners within the same company that have limited liability. This company can best be described as a/an ______.
a. unlimited partnership
b. limited partnership
c. uniform partnership
d. limited-liability company
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
87. Without a written agreement, a partnership operates according to the rules of the states under the ______.
a. Uniform Partnership Act
b. State Regulated Partnership Act
c. Federal Partnership Act
d. Small Business Administration
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
88. In a limited partnership, at least one partner ______.
a. has unlimited liability
b. has limited liability
c. has raised 50 percent more capital than the other partners
d. has given up any tax advantages
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
89. The “right of first refusal” refers to which of the following?
a. Partners may refuse to let one of the partners leave the business.
b. Partners may allow one partner to have only limited liability.
c. Partners may have first chance at buying the selling partner’s shares in the business.
d. Partners may refuse to pay out the profits of the business and instead reinvest the money back into the business.
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
90. A business structure in which one or more of the owners may be granted limited liability as long as one partner is designated a general partner is called a ______.
a. general partnership
b. fragmented partnership
c. limited partnership
d. segmented partnership
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
91. If the partners in a partnership have not written a legal agreement, which act helps to settle any problems that may arise?
a. SBA
b. SEC
c. UPA
d. FTC
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
92. A contract between partners of a business that defines obligations and responsibilities of the business owners is called the ______.
a. UPA
b. incorporation of the partnership
c. article of partnership
d. partnership contract
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
93. Corporations that sell shares of stock to the public and are listed on the stock exchange are referred to as ______.
a. divested corporations
b. entrepreneurial corporations
c. closely held corporations
d. public corporations
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
94. A partnership that is created to complete a specified purpose and is limited in duration is called a ______.
a. general partnership
b. limited partnership
c. corporation
d. joint venture
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
95. Which form of business ownership is the most complicated to form?
a. sole proprietorships
b. partnerships
c. corporations
d. subsidiaries
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
96. Sylvia is looking to start her own sporting goods manufacturing company, but the venture will require a great deal of start-up investment. Which of these should she choose to ensure adequate financing?
a. partnership
b. sole proprietorship
c. corporation
d. small independent business
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
97. Which of the following forms of business ownership has the following advantages: limited liability, increased access to resources, and easy transfer of ownership?
a. sole proprietorship
b. partnership
c. corporation
d. joint venture
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
98. Which of the following forms of business ownership has the following disadvantages: expensive to start, complex to maintain, and double taxation?
a. sole proprietorship
b. partnership
c. corporation
d. closely held corporation
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
99. The legal and administrative costs are one of the major disadvantages of which form of business ownership?
a. sole proprietorships
b. partnerships
c. corporations
d. general partnerships
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
100. What types of business entities are subject to double taxation?
a. sole proprietorships
b. partnerships
c. public corporations
d. private corporations
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
101. A type of corporation that taxes the owners as partners yet provides more flexibility is called a/an ______.
a. nonprofit corporation
b. S corporation
c. limited partnership
d. limited-liability company
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
102. A special type of corporation in which the owners are taxed as partners is called a/an ______.
a. nonprofit corporation
b. S corporation
c. limited partnership
d. limited-liability company
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
103. What types of corporations largely depend on grants from private foundations and public donations to meet expenses?
a. nonprofit corporations
b. limited-liability companies
c. S corporations
d. C corporations
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
NARRBEGIN: 10-3
Scenario 10-3. Mary Manting is opening her new business. She is offering a day camp/day care summer experience for a newly developed suburb in upscale Yolando. She has little capital and little management experience, and she is concerned with the possibility of lawsuits due to the nature of her business and the unlimited liability that she could then face. She comes to you for business advice.
NARREND
104. In Scenario 10-3, what would be the major advantage of establishing her business as a sole proprietorship?
a. independence
b. unlimited resources
c. pooled talents
d. double taxation
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
NAR: 10-3
105. In Scenario 10-3, what would be the major advantage of establishing her business as a general partnership?
a. independence
b. limited liability
c. pooled talents and resources
d. double taxation
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
NAR: 10-3
106. In Scenario 10-3, which form of business ownership should she choose?
a. sole proprietorship
b. partnership
c. corporation
d. sole partnership
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
NAR: 10-3
107. In Scenario 10-3, what will be the biggest advantage of establishing her business as a corporation?
a. unlimited liability
b. independence
c. ease of setup
d. limited liability
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Medium
TOP: AACSB Standard: Reflective thinking
NAR: 10-3
True/False
1. According to the text, laws ensure fair competition, allow contracts to be enforced, and protect consumer rights.
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
2. With a minimal education, the wording of most laws and regulations is easy to understand.
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
3. The best time for a small business to get a lawyer is when the business is in trouble.
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
4. Competition decreases the need for government intervention in the market.
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
5. Antitrust laws were written to prevent large businesses from forming trusts.
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
6. More and more, U.S. laws are becoming increasingly based on the rule of caveat emptor: “Let the buyer beware.”
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
7. Executive workers and professional employees may be exempt from the minimum wage and overtime pay requirements of the Fair Labor Standards Act.
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
8. The Americans with Disabilities Act of 1990 considers recovering drug addicts, alcoholics, and individuals with HIV or AIDS as those covered by the employment discrimination provision.
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
9. To be considered sexual harassment, only those directly affected by the actions can file a suit.
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
10. The beginning point for determining small business compliance with the ACA is the number of full-time employees.
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
11. Bankruptcy is a remedy for becoming solvent.
KEY: Learning Objective: 10.2: List and explain the types of bankruptcy.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.2: Bankruptcy Laws
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
12. Chapter 11 bankruptcy provides a second chance for a business that is in financial trouble but still has potential to succeed.
KEY: Learning Objective: 10.2: List and explain the types of bankruptcy.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.2: Bankruptcy Laws
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
13. Chapter 7 bankruptcy means that the business will be liquidated.
KEY: Learning Objective: 10.2: List and explain the types of bankruptcy.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.2: Bankruptcy Laws
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
14. Other businesses that declare bankruptcy may provide an opportunity for you.
KEY: Learning Objective: 10.2: List and explain the types of bankruptcy.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.2: Bankruptcy Laws
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
15. If a business involves the sale or preparation of food, a business owner will need to obtain health department permits and also be subject to regular inspections.
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
16. In most cases, declaring bankruptcy for a failed business will leave the business owner penniless and homeless.
KEY: Learning Objective: 10.2: List and explain the types of bankruptcy.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.2: Bankruptcy Laws
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
17. About three out of every four bankruptcy filings take place under Chapter 11.
KEY: Learning Objective: 10.2: List and explain the types of bankruptcy.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.2: Bankruptcy Laws
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
18. Chapter 13 bankruptcy allows individuals, including small business owners, who owe less than $250,000 in unsecured debts and secured debts of less than $750,000 to pay back creditors over a three- to five-year period.
KEY: Learning Objective: 10.2: List and explain the types of bankruptcy.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.2: Bankruptcy Laws
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
19. Under Chapter 13 bankruptcy, a plan must be submitted to a bankruptcy judge that shows how most types of the debt will be paid in full.
KEY: Learning Objective: 10.2: List and explain the types of bankruptcy.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.2: Bankruptcy Laws
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
20. A contract is a promise that is enforceable by law.
KEY: Learning Objective: 10.3: Describe the elements of a contract.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.3: Contract Law For Small Businesses
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
21. Contract law comprises the body of laws that are intended to ensure parties entering into contracts comply.
KEY: Learning Objective: 10.3: Describe the elements of a contract.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.3: Contract Law For Small Businesses
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
22. A contract must be in writing to be enforceable.
KEY: Learning Objective: 10.3: Describe the elements of a contract.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.3: Contract Law For Small Businesses
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
23. Capacity is one of the four basic elements of a contract.
KEY: Learning Objective: 10.3: Describe the elements of a contract.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.3: Contract Law For Small Businesses
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
24. Contracts involving the sale of real estate must be in writing.
KEY: Learning Objective: 10.3: Describe the elements of a contract.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.3: Contract Law For Small Businesses
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
25. The payment of someone else’s debt should always be in writing.
KEY: Learning Objective: 10.3: Describe the elements of a contract.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.3: Contract Law For Small Businesses
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
26. Intellectual property is a product or some type of human thought that is created through the mental skills of a person.
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.4: Laws to Protect Intellectual Property
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
27. A patent is a form of protection for intellectual property provided to an inventor for a period of 17 years.
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.4: Laws to Protect Intellectual Property
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
28. The three types of patents in existence today are utility patents, design patents, and plant patents.
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.4: Laws to Protect Intellectual Property
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
29. To qualify for a patent, an invention does not necessarily have to provide some legal utility.
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.4: Laws to Protect Intellectual Property
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
30. A novel item or creation meets one of the four requirements for obtaining a patent.
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.4: Laws to Protect Intellectual Property
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
31. A copyright protects literary, musical, or artistic works for the period of the creator’s life plus 125 years.
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.4: Laws to Protect Intellectual Property
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
32. A copyright is synonymous with a patent.
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.4: Laws to Protect Intellectual Property
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
33. A trademark is a form of protection for intellectual property provided to the owner of a brand name or symbol.
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.4: Laws to Protect Intellectual Property
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
34. Patents, copyrights, or trademarks obtained in the United States will provide the same protection in foreign countries.
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.4: Laws to Protect Intellectual Property
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
35. The most common form of business in the United States today is the corporation.
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
36. A sole proprietorship is owned by two or more persons.
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
37. A major advantage of a sole proprietorship is that the owner has complete control over the business.
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
38. The major disadvantage of a sole proprietorship is limited liability.
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
39. The biggest advantage of partnerships is the pooling of talents and resources.
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
40. In a partnership, if both partners bring the same qualities to the business, then one of them is probably not needed.
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
41. Although the ability to raise capital is better with a partnership than with a proprietorship, a partnership still cannot usually gather as many resources as a corporation.
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
42. In a partnership, the partners will be held liable only for their own negligence.
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
43. If a partner leaves, the partnership is dissolved and the remaining partners can either find a new partner or terminate the business.
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
44. One of the most serious problems that can threaten a partnership is managerial conflict.
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
45. Foresight in writing articles of partnership can solve many partner problems in the future.
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
46. A closely held corporation publicly trades its shares of stock on a major auction market.
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
47. A form of business ownership where the business is owned by a limited group of people and the stock is not traded publicly is called a closely held corporation.
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
48. Limited liability is the major advantage of forming a business as a corporation.
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
49. C corporations and S corporations are taxed the same.
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
50. A document describing a business that is filed with the state in which a business is formed is referred to as articles of incorporation.
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
51. C corporations provide individuals with limited-liability protection of a corporation while allowing the tax advantages of a partnership.
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
52. LLCs can be an attractive form of ownership for small businesses.
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Knowledge
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Easy
TOP: AACSB Standard: Analytical thinking
Short Answer
1. Discuss three laws that affect small businesses.
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
2. Discuss the areas that are covered by OSHA workplace standards.
KEY: Learning Objective: 10.1: Name the laws and regulations that affect small business.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 10.1: Small Business and the Law
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
3. Discuss the three primary types of bankruptcy that affect small businesses.
KEY: Learning Objective: 10.2: List and explain the types of bankruptcy.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 10.2: Bankruptcy Laws
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
4. Discuss two of the four elements of a binding contract.
KEY: Learning Objective: 10.3: Describe the elements of a contract.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 10.3: Contract Law For Small Businesses
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
5. Compare and contrast the three types of patents.
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 10.4: Laws to Protect Intellectual Property
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
6. Compare and contrast patents, copyrights, and trademarks.
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 10.4: Laws to Protect Intellectual Property
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
7. Discuss two aspects of global protection of intellectual property.
KEY: Learning Objective: 10.4: Discuss how to protect intellectual property.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 10.4: Laws to Protect Intellectual Property
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
8. Compare and contrast a sole proprietorship, a partnership, and a corporation.
KEY: Learning Objective: 10.5: Describe the three main forms of ownership--sole proprietorship, partnership, and corporation--and their unique features.
REF: Cognitive Domain: Comprehension
Answer Location: Concept Module 10.5: Forms of Business Organization
Difficulty Level: Medium
TOP: AACSB Standard: Analytical thinking
Document Information
Connected Book
Small Business Competitive Advantage 7e Test Bank
By Timothy S. Hatten