Chapter 1
Law and Legal Reasoning
N.B.: TYPE indicates that a question is new, modified, or unchanged, as follows.
NA question new to this edition of the Test Bank.
+A question modified from the previous edition of the Test Bank.
=A question included in the previous edition of the Test Bank.
TRUE/FALSE QUESTIONS
B1. Laws and government regulations affect almost all business activities.
ANSWER: T PAGE: 2 TYPE: N
BUSPROG: Analytic AICPA: BB-Legal
B2. The U.S. Constitution is the basis of all law in the United States.
ANSWER: T PAGE: 4 TYPE: +
BUSPROG: Analytic AICPA: BB-Legal
B3. The U.S. Constitution reserves to the federal government all powers not
granted to the states.
ANSWER: F PAGE: 4 TYPE: N
BUSPROG: Analytic AICPA: BB-Critical Thinking
B4. The Uniform Commercial Code has been adopted in all fifty states.
ANSWER: T PAGE: 5 TYPE: +
BUSPROG: Reflective AICPA: BB-Critical Thinking
1
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accessible website, in whole or in part.
2 TEST BANK B—UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS
B5. Federal agency regulations take precedence over conflicting state agency
regulations.
ANSWER: T PAGE: 5 TYPE: +
BUSPROG: Analytic AICPA: BB-Legal
B6. Common law is a term for the laws that are familiar to most of us.
ANSWER: F PAGE: 6 TYPE: =
BUSPROG: Analytic AICPA: BB-Critical Thinking
B7. Decisions by higher courts are not binding on lower courts.
ANSWER: F PAGE: 8 TYPE: +
BUSPROG: Analytic AICPA: BB-Legal
B8. Stare decisis is a doctrine obligating judges to help persons who have failed to
protect their own rights.
ANSWER: F PAGE: 8 TYPE: =
BUSPROG: Analytic AICPA: BB-Legal
B9. Courts are not obligated to follow precedents.
ANSWER: F PAGE: 9 TYPE: N
BUSPROG: Reflective AICPA: BB-Critical Thinking
B10. In most legal controversies, there is one single correct result.
ANSWER: F PAGE: 10 TYPE: N
BUSPROG: Analytic AICPA: BB-Critical Thinking
B11. Although cases may be similar, no two cases are ever identical in all respects.
ANSWER: T PAGE: 10 TYPE: N
BUSPROG: Analytic AICPA: BB-Critical Thinking
B12. Each judge had his or her personal beliefs and philosophy, which shape the
legal reasoning process.
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accessible website, in whole or in part.
CHAPTER 1: LAW AND LEGAL REASONING 3
ANSWER: T PAGE: 10 TYPE: N
BUSPROG: Reflective AICPA: BB-Critical Thinking
B13. Clearly, a judge’s function is to make the laws.
ANSWER: F PAGE: 11 TYPE: N
BUSPROG: Analytic AICPA: BB-Critical Thinking
B14. The courts, in interpreting statutory law, often rely on the common law as a
guide to what the legislators intended.
ANSWER: T PAGE: 11 TYPE: N
BUSPROG: Analytic AICPA: BB-Critical Thinking
B15. A jury’s good sense and careful consideration of consequences is known as
jurisprudence.
ANSWER: F PAGE: 11 TYPE: =
BUSPROG: Reflective AICPA: BB-Critical Thinking
B16. Procedural law consists of all laws that outline the methods of enforcing rights.
ANSWER: T PAGE: 12 TYPE: N
BUSPROG: Analytic AICPA: BB-Legal
B17. A citation identifies the publication in which a legal authority can be found.
ANSWER: T PAGE: 13 TYPE: N
BUSPROG: Analytic AICPA: BB-Research
B18. The decisions made by the courts establish the boundaries of the law as it
applies to almost all business relationships.
ANSWER: T PAGE: 15 TYPE: N
BUSPROG: Analytic AICPA: BB-Critical Thinking
B19. The party against whom a lawsuit is brought is the plaintiff or petitioner.
ANSWER: F PAGE: 20 TYPE: N
BUSPROG: Analytic AICPA: BB-Critical Thinking
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly
accessible website, in whole or in part.
4 TEST BANK B—UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS
B20. When all the judges (or justices) agree on a decision, a majority opinion is
written for the entire court.
ANSWER: F PAGE: 20 TYPE: N
BUSPROG: Reflective AICPA: BB-Critical Thinking
MULTIPLE-CHOICE QUESTIONS
B1. Data Analytics, Inc., is a corporation engaged in the business of compiling,
analyzing, and marketing data. To accomplish its purposes, Data Analytics
obtains financing, and hires and fires employees. Laws and government
regulations affect such business activities as
a. hiring and firing decisions.
b. the manufacturing and marketing of products.
c. business financing.
d. all of the choices.
ANSWER: D PAGE: 2 TYPE: N
BUSPROG: Reflective AICPA: BB-Critical Thinking
