Question 1

A(n) ________ is an agreement between two or more parties that is enforceable by law.

Accepted Answer

A)   trust
B)   contract
C)   understanding
D)   None of the above. B

Question 2

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

Accepted Answer

A)   limit of liability
B)   statute of legal obligations
C)   statute of limitations
D)   None of the above. C

Question 3

The limited liability company (LLC) combines the best features of partnerships and corporations and can be an excellent choice for small business with a limited number of owners.

Accepted Answer

A) True 
 B)False  True

Question 4

A low deductible will yield a ________.

Accepted Answer

A)   lower premium
B)   higher coverage plan
C)   has no impact on the premium
D)   higher premium

Question 5

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.

Accepted Answer

A)   regulations
B)   grants
C)   taxes
D)   zoning

Question 6

________ are the building blocks of business.

Accepted Answer

A)   Letters of agreements
B)   Contracts
C)   Personal relationships
D)   Customer services

Question 7

Contract drafting and review is something the business owner can do and should do using law books at the local library.

Accepted Answer

A) True 
 B)False

Question 8

Explain the three types of insurance most states require business owners to carry.

Accepted Answer

The answer of Explain the three types of insurance most...

Question 9

How is a legal entity, such as a corporation, similar to a person? If you owned a business, why might you want it to be incorporated?

Accepted Answer

The answer of How is a legal entity, such as...

Question 10

A(n) ________ is an official document that gives you the right to carry out a specific activity, such as an outdoor festival.

Accepted Answer

A)   license
B)   certificate
C)   permit
D)   entitlement

Question 11

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

Accepted Answer

A)   sales mark
B)   trademark
C)   service mark
D)   intellectual property

Question 12

________ insurance compensates employees for loss of income and for medical expenses due to job-related injuries.

Accepted Answer

A)   Short-term disability
B)   Disability
C)   Injury
D)   Worker's compensation

Question 13

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

Accepted Answer

A)   patent
B)   electronic right
C)   trademark
D)   copyright

Question 14

Obtain a trademark in order to ________.

Accepted Answer

A)   protect your logo
B)   register your business name
C)   protect all your intellectual property
D)   protect your business name

Question 15

Which is not a potential penalty for breaking a contract?

Accepted Answer

A)   You may lose a share of the ownership of your business to the other party who signed the contract.
B)   You may be sued in a court of law by the other party who signed the contract.
C)   A court may order you to pay damages to the other party who signed the contract.
D)   It can be costly.

Question 16

Which of the following are not usually not-for-profit organizations?

Accepted Answer

A)   trade associations
B)   charitable foundations
C)   churches
D)   book stores

Question 17

Why are contracts useful to business owners?

Accepted Answer

The answer of Why are contracts useful to business owners?...

Question 18

A ________ is the amount of loss or damage that you agree to cover before any insurance coverage takes over.

Accepted Answer

A)   deductible
B)   carrying cost
C)   premium
D)   co-insurance

Question 19

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

Accepted Answer

A)   negotiation
B)   coercion
C)   arbitration
D)   small claims

Question 20

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

Accepted Answer

A)   taxed only once
B)   always high
C)   taxed twice
D)   taxed three times

Exam 11: Addressing Legal Issues and Managing Risk