24) ________ insurance compensates employees for loss of income and for medical expenses
due to job-related injuries.
A) Worker’s compensation
B) Injury
C) Disability
D) Liability
E) Life
Learning Obj.: LO 5
AACSB: Analytical thinking
25) Every corporation is recognized and treated under the law as ________.
A) An entity, much like a person, that has expenses and earnings
B) A small business
C) If it were its owners and employees
D) A large business
E) A stockholder
Learning Obj.: LO 1
AACSB: Analytical thinking
26) In limited liability companies ________.
A) Income is taxed only once, as the personal earnings of members
B) Income is taxed twice, corporately and personally
C) Personal assets of the owners are left legally unprotected
D) Income is never taxed
E) Income is overtaxed
Learning Obj.: LO 1
AACSB: Analytical thinking
27) To protect against lawsuits brought by anyone injured by your product, you will need to buy
________.
A) Liability insurance
B) Casualty insurance
C) Business insurance
D) Life insurance
E) Fire insurance
Learning Obj.: LO 5
AACSB: Analytical thinking
7
28) A ________ is the amount of loss or damage that you agree to cover before any insurance
coverage takes over.
A) Deductible
B) Carrying cost
C) Premium
D) Policy
E) Liability
Learning Obj.: LO 5
AACSB: Analytical thinking
29) A ________ is an official document that gives you the right to carry out a specific activity,
such as an outdoor Festival.
A) Permit
B) Certificate
C) Warrant
D) License
E) Pass
Learning Obj.: LO 5
AACSB: Analytical thinking
30) Which of the following are not usually not-for-profit organizations?
A) Book stores
B) Trade associations
C) Charitable foundations
D) Churches
E) Educational institutions
Learning Obj.: LO 1
AACSB: Application of knowledge
31) A 501(c)(8) is a tax-exempt legal structure that can receive charitable donations from
individuals, businesses, the government, and philanthropic foundations.
Learning Obj.: LO 1
AACSB: Analytical thinking
8
32) When putting together a contract, clearly state everything that will be done by all parties,
even what is obvious.
Learning Obj.: LO 2
AACSB: Analytical thinking
33) Corporations may not issue stock to raise money.
Learning Obj.: LO 1
AACSB: Analytical thinking
34) Corporations are considered to be legal persons or entities.
Learning Obj.: LO 1
AACSB: Analytical thinking
35) A service mark is inferior to a trademark.
Learning Obj.: LO 4
AACSB: Analytical thinking
36) Bankruptcy is the legal process in which an individual or business declares the inability or
impaired ability to pay debts as they come due.
Learning Obj.: LO 3
AACSB: Analytical thinking
37) The Limited Liability Company combines the worst features of partnerships and corporations
and can be a poor choice for small businesses with a limited number of owners.
Learning Obj.: LO 1
AACSB: Analytical thinking
38) Work-made-for-hire means you are giving up the rights to your work.
Learning Obj.: LO 4
AACSB: Analytical thinking
9
39) It is not necessary to have an attorney look at a contract prior to signing it.
Learning Obj.: LO 2
AACSB: Analytical thinking
works of authorship,” including literary, dramatic, musical, and artistic works.
Learning Obj.: LO 4
AACSB: Analytical thinking
41) A contract can protect you, regardless of whether you trust the person or not.
Learning Obj.: LO 2
AACSB: Analytical thinking
42) The power of a contract is that, once the individuals or other entities involved have signed it,
they are obligated to comply with its terms and conditions or risk being sued and penalized
according to the contract terms, or in a court of law.
Learning Obj.: LO 2
AACSB: Analytical thinking
43) An advantage of sole proprietorship is that it is an easy form of business to start.
Learning Obj.: LO 1
AACSB: Analytical thinking
44) Product liability insurance covers the risks in case your product harms someone.
Learning Obj.: LO 5
AACSB: Analytical thinking
45) A partnership consists of two or more owners who make the decisions for the business
together and share the profits, losses, assets, and liabilities.
Learning Obj.: LO 1
AACSB: Analytical thinking
10
46) What is the Law of Agency?
Learning Obj.: LO 3
AACSB: Analytical thinking
47) Why are contracts useful to business owners?
Learning Obj.: LO 2
AACSB: Analytical thinking
under U.S. law to the authors of “original works of authorship,” including literary, dramatic,
musical, and artistic works.
Learning Obj.: LO 4
AACSB: Analytical thinking
49) What is a Subchapter S corporation?
Learning Obj.: LO 1
AACSB: Analytical thinking
50) How is a legal entity, such as a corporation, similar to a person?
Learning Obj.: LO 1
AACSB: Reflective thinking
11