Question 1 (1 point)
Kelly, the owner of Llama Farms, a sole proprietorship,
wants to obtain additional busi¬ness capital but to maintain control. This can
best be ac-complished by:
Question 1 options:
borrowing funds.
selling the business.
issuing stock.
bringing in partners.
Question 2 (1 point)
The Office of Postsecondary Education, like other federal
administra¬tive agencies, is part of the government’s:
Question 2 options:
executive branch.
legislative branch.
judicial branch.
administrative branch.
Question 3 (1 point)
Kay is a salesperson for Liberty Financial Corporation. Mac
is also a Liberty salesperson. Neil is Kay and Mac s supervisor. Own is a
Liberty customer. Liberty may be liable for sexual harassment to Kay by:
Question 3 options:
Mac only.
Neil only.
Mac, Neil, or Owen.
Mac or Neil only.
Question 4 (1 point)
Parker and Oscar sign a partnership agreement to do business
as “Parker’s Plumbing” without specifying a duration. This partnership is
terminable:
Question 4 options:
at any time by either partner.
only if Oscar dissociates from the firm.
only if Parker dissociates from the firm.
only after a reasonable term.
Question 5 (1 point)
Accounting Applications, LLC, is a limited liability
company. Unless indicated otherwise on Accounting s federal tax form, the firm
will be taxed as:
Question 5 options:
a partnership.
a corporation.
a sole proprietorship.
a person.
Question 6 (1 point)
Cardio, Inc., makes and sells Drawdown, the most prescribed
name-brand heart medication. Emitate Corporation has the potential to make a
generic version of the same drug. Cardio pays Emitate not to sell its product.
This price-fixing agreement is most likely:
Question 6 options:
a legal restraint of trade.
a deal that neither restrains trade or harms competition.
a per se violation of antitrust law.
subject to analysis under the rule of reason.
Question 7 (1 point)
Ben is admitted to Consolidated Associates, an existing
partnership. A partnership debt incurred before the date of his admission comes
due. Ben is:
Question 7 options:
only liable for the debt up to the amount of his capital
contribution.
personally liable only to the extent the other partners do
not pay.
not liable for the debt.
personally liable to the full extent of the debt.
Question 8 (1 point)
The functions of the National Labor Relations Board, like
those of most administrative agencies, include:
Question 8 options:
rulemaking only.
adjudication, investigation, and rulemaking.
adjudication and investigation only.
none of the above.
Question 9 (1 point)
Precise GPS Company’s ad states that its product is “the
finest that money can buy.” Because of this ad, the Federal Trade Com¬mission
is most likely to issue:
Question 9 options:
a cease-and-desist order.
a counteradvertising order.
none of the choices.
a multiple product order.
Question 10 (1 point)
Verna makes a living by commercial fishing in a river
allegedly polluted by Wall Paint Company. To bring a suit against Wall Paint on
the ground of private nuisance, Verna must allege that she suffers from:
Question 10 options:
a lesser harm than an injunction would impose on Wall Paint.
Wall Paint’s failure to use reasonable care to avert herm to
Verna.
a distinct harm separate from that affecting the general
public.
the same harm as that affecting the general public.
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Question 11 (1 point)
Regional Distribution, Inc., files a suit against Sam, its
former accountant, alleging actual fraud. Regional must prove
Question 11 options:
detrimental reliance only.
none of the above.
an intent to deceive and detrimental reliance.
an intent to deceive only.
Question 12 (1 point)
Nora is an executive for Omega Corporation. When acting for
Omega in an ordinary business situation, Nora is:
Question 12 options:
an agent only.
neither an agent nor a principal.
a principal only.
an agent and a principal.
Question 13 (1 point)
Kelly, Lars, and Mona agree to be partners n Neighborhood
Delivery Service (NDS), splitting the profits equally. Kelly contributes 67
percent of the capital. When NDS is dissolved, its liabilities are greater than
its assets. The losses are paid by:
Question 13 options:
Kelly because she contributed most of the capital.
Lars and Mona because they contributed the least of the
capital.
all of the partners in proportion to their capital
contributions.
all of the partners in proportion to their shares of the
profits.
Question 14 (1 point)
Concert Promotions Corporation licenses trademarks to
Souvenir Specialties, Inc., to use in selling caps, sweatshirts, and similar
goods. This is:
Question 14 options:
a sole proprietorship.
an entrepreneur.
a principal-agent relationship.
a franchise.
Question 15 (1 point)
Orange Company makes computers. The company’s ad states that
“if you aren’t eatin’ an Orange, you aren’t gettin’ any ‘C.’ ” The Federal
Trade Com-mission would consider this ad:
Question 15 options:
impermissibly vague and general.
false and misleading.
none of the choices.
a deceptive half-truth.
Question 16 (1 point)
Property Investments Corporation would like to change its
corporate status to avoid income taxes at the corporate lever. To qualify, the
firm must be:
Question 16 options:
a foreign corporation.
a public corporation.
an alien corporation.
a domestic corporation.
Question 17 (1 point)
Ester is a lighting technician who hires out on a
per-project basis to film and television production companies, as well as
theatres and other venues that stage dramatic and musical performances. In this
capacity, Ester is:
Question 17 options:
an employee.
an agent.
a principal.
an independent contractor.
Question 18 (1 point)
Credit Extender, Inc. (CE), a creditor, wants to perfect its
interest in property owned by Dandy Goods, Inc. (DG). Filing a financing
statement
Question 18 options:
reduces CE, on DG s bankruptcy, to an unsecured creditor.
is a technicality that has no practical effect.
transfers DG s property into CE s possession.
gives notice to other creditors of CE s security interest.
Question 19 (1 point)
Ron, an accountant, fails to perform a contract with Stan,
who suffers some penalties for Ron s failure to meet certain deadlines. Stan
spends money to hire Tina to provide the contracted-for services. Ron may be
liable for
Question 19 options:
only the expenses incurred by Stan to hire Tina.
none of the above.
only the penalties imposed on Stan.
the expenses and the penalties.
Question 20 (1 point)
Digitech is a foreign corporation, which means that
Digitech:
Question 20 options:
is chartered in a country other than the U.S., such as
Japan.
is an alien corporation.
may be required to obtain a certificate of authority to do
business in states where it is not chartered.
may transact business only in foreign nations.
Question 21 (1 point)
Great States Storage, Inc., a private company, wants to
build a warehouse on private land. For this action, an environmental impact
statement is:
Question 21 options:
required.
voluntary.
unnecessary.
prohibited.
Question 22 (1 point)
Friendly Credit Corporation (FCC) believes that Gary may
dispose of the assets that FCC expects to receive as payment for Gary s debt
before FCC can obtain a judgment. FCC may ask a court to issue a writ of:
Question 22 options:
attachment.
contribution.
execution.
redemption.
Question 23 (1 point)
Thirty-one days before filing a petition in bankruptcy, Tom
transfers property and makes payments that favor one creditor over another.
These are:
Question 23 options:
none of the above
preferences.
secured interests.
considerations.
Question 24 (1 point)
A petition for a discharge in bankruptcy under Chapter 7 may
be filed by:
Question 24 options:
Regional Employees Credit Union, a corporation.
First Savings and Loan Association, a corporation.
Interstate Insurance Company, a corporation.
Holly, an investment adviser.
Question 25 (1 point)
Better Products Corporation makes and markets a variety of
household goods. All Better Products product labels must identify:
Question 25 options:
the manufacturer.
the percentage of the product that consists of artificial
substances.
the federal agency that inspected the product.
the address to which complaints can be directed.
Question 26 (1 point)
Bernie wants to go into the business of construction
contracting. Among the reasons that would probably convince Bernie to set up
his business as a sole proprietorship would be:
Question 26 options:
the ease of transferring the business to other family
members.
its perpetual existence.
its greater flexibility.
its limited liability.
Question 27 (1 point)
Ethan is seventeen years old. Under the Fair Labor Standards
Act, Ethan cannot work:
Question 27 options:
during school hours.
in a hazardous job.
more than eighteen hours per week.
without a special permit.
Question 28 (1 point)
Nikita operates a sole proprietorship, a corporation, and a
partnership. Nikita wants to obtain relief for her individual debts and the
debts of her corporation and partnership. For each of these, Nikita may file a
petition in bankruptcy for relief through:
Question 28 options:
a reorganization.
a liquidation.
a repayment plan.
a family-farmer bankruptcy plan.
Question 29 (1 point)
Phil s voluntary petition for bankruptcy is found to be
proper. The order for relief is effective as soon as:
Question 29 options:
Phil s creditors agree to the terms.
Phil posts a bond to cover the costs of the proceedings.
Phil files the petition.
the trustee collects and distributes the property of Phil s
estate.
Question 30 (1 point)
Ann owes Ben $500 on their contract, but refuses to pay. To
collect, Ben files a mechanic s lien, under which security for the debt is
represented by:
Question 30 options:
Ann s real estate.
the contract.
Ann s personal property.
the $500 owed under the contract.
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Question 31 (1 point)
Techno Company s advertisement states that if you aren t
using a Techno computer, you aren t using the best. The Federal Trade
Commission would consider this ad:
Question 31 options:
none of the above.
misleading only.
false and misleading.
false only.
Question 32 (1 point)
Mold & Dye Corporation is a private employer in¬volved
in an employment discrimination suit under the Civil Rights Act of 1964.
Punitive damages may be recovered against Mold & Dye only if the employer:
Question 32 options:
can easily afford to pay the amount.
consents.
acted with malice or reckless indifference.
has one hundred or more employees.
Question 33 (1 point)
All-Rite Manufacturing Company pays a premium for an
insurance policy on the life of Bill, its president. Cathy, an agent for
National Insurance Company, sells the policy. The underwriter is:
Question 33 options:
Cathy.
Bill.
National Insurance Company.
All-Rite Manufacturing Company.
Question 34 (1 point)
Petro Oil Company wants to conduct genetic testing of its
workers to identify those who might develop significant health problems in the
future. Under federal law, Petro may use genetic information to:
Question 34 options:
deny group health-care coverage or charge a higher premium.
make decisions about hiring or firing.
make decision about job placement or promotion.
none of the choices.
Question 35 (1 point)
Caleb is a witness in a contro¬versy involving the U.S. Drug
Enforcement Administration. Caleb can be compelled to appear before an
adminis¬trative law judge if he is served with:
Question 35 options:
a rule for parol evidence.
an order for specific performance.
a subpoena.
a politely worded request.
Question 36 (1 point)
GR8 Fashion, Inc., complains to the Federal Trade Commission
(FTC) about an ad broadcast by Hy-Time Clothes Company, GR8’s competitor. The
FTC investigates and concludes that the ad is deceptive. The FTC’s next step is
to:
Question 36 options:
permit GR8 to broadcast similarly deceptive
counteradvertising.
draft a formal complaint.
conduct negotiations between the competitors.
issue a cease-and-desist order.
Question 37 (1 point)
Earl applies for, and obtains, a life insurance policy from
Federated Insurance Corporation that contains an incontestability clause. This
clause provides that Federated cannot contest statements made in the
application
Question 37 options:
as soon as the policy is issued.
after the policy has been effect for a specified period of
time.
under any circumstances.
none of the above.
Question 38 (1 point)
Joyce works for Kappa Services Corporation as an independent
contractor, and not as an employee, if:
Question 38 options:
Joyce works on a permanent basis.
Kappa does not control Joyce s work.
Joyce says that she works as an independent contractor.
Kappa withholds taxes form its payments to Joyce.
Question 39 (1 point)
The Food and Drug Administration (FDA) is investigating
reports that Rocco s Foods, Inc., is putting potentially harmful additives in
hot dogs. The FDA s demands for particular documents from Rocco s Foods must
be:
Question 39 options:
none of the above.
specific only.
specific and not unduly burdensome.
not unduly burdensome only.
Question 40 (1 point)
China Bank is a foreign entity—a firm owned and operated by
investors in a foreign country. With respect to a limited liability company in
the United States, China Bank can:
Question 40 options:
act as a creditor, but cannot otherwise invest or participate.
not become a member, but can participate in its operations.
not become a member or otherwise participate in its
operations.
become a member.
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Question 41 (1 point)
Pat enters into a franchise agreement with Quik Food, Inc.,
which agrees not to grant additional franchises within Region City. When Quik
later grants those other franchises, Pat files a suit to close them. This suit
will likely:
Question 41 options:
fail if Quik did not give Pat exclusive rights to Region
City.
succeed if Pat paid a franchise fee.
succeed if Pat was the first Quik franchisee in Region City.
fail because excluding competitors violates the antitrust
laws.
Question 42 (1 point)
Ava is an accountant charged by Best Sales, Inc., a client,
with negligence. Ava may successfully defend against the claim if she can show
that:
Question 42 options:
scienter was lacking.
the negligence was only contributory.
the negligence was not the proximate cause of the client s
losses.
she complied with all generally accepted accounting
principles.
Question 43 (1 point)
Natural Gas Company does not use proper filters on its
smokestacks, which consequently pollute the air. Obie, a Natural Gas employee,
suffers respiratory illness. To succeed in a suit against Natural Gas on the
ground of negligence, Obie must show that he suffers from:
Question 43 options:
the same harm as that affecting the general public.
Natural Gas’s failure to use reasonable care to avert herm
to Obie.
a lesser harm than an injunction would impose on Natural
Gas.
a distinct harm separate from that affecting the general
public.
