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Betty and Aaron Forming a Small Business

1. Betty and Aaron plan to form a small business, the purpose of which will be to market various computer games. If Betty is concerned with personal liability, should something go wrong in the business, she should convince Aaron to form the business as a:
A._____ Sole proprietorship
B._____ Partnership
C._____ Corporation

2. Smith and Jones are partners in a small accounting firm. Smith makes some serious errors on Lloyd's tax return, which makes Lloyd liable to the IRS for monetary penalties and interest. Which of the following statements is true should Lloyd choose to sue for damages?
A._____ He can only sue Smith, since Smith prepared the tax returns and made the errors.
B._____ He can sue Smith and Jones, but only if Jones helped in some way to prepare the tax return.
C._____ He can sue Smith and Jones, since they are partners.
D._____ He can't sue either of them.

3. Robert gives Peter a piece of paper which says, "I, Robert, owe Peter $2,500 for money he loaned to me in February, April, and June." Robert has signed the note. The legal term used for this piece of paper is:
A._____ Promissory Note
B._____ Check
C._____ Draft
D._____ Acknowledgment of Indebtedness

4. Sharon owes Irma $500.00. Sharon has just received a check made payable to her from the Ajax Company, for work Sharon performed for Ajax. She endorses the check and gives it to Irma in payment of her indebtedness to Irma. Ajax then notifies Sharon that it wants its check back because it discovered that Sharon had not completed the work for Ajax as originally thought. Who has the right to the check?
A._____ Ajax
B._____ Irma
C._____ Neither Irma nor Ajax
D._____ Sharon

5. With regard to the scenario in Question 4, if you were Irma, and Sharon was going to endorse the aforesaid check over to you, what steps would you recommend be followed in order to protect yourself in case the check was lost or misplaced.
A._____ Sharon should endorse the check and give it to Irma.
B______ Sharon should write the following words on the back of the check "Pay to the order of Irma" and then endorse it and give it to Irma
C._____ Sharon should write the following words on the back of the check "Pay to the order of Irma" and then endorse it and give it to Irma. Irma should then immediately sign her name to it also.

6. Mary and Ed are domestic partners. They own a joint account at the local bank, which has a balance of $50,000.00. Most of the money was deposited into the account by Mary, who has the better paying job. Mary is killed in an automobile accident. When her estate is probated, it is discovered that she never updated her Last Will and Testament. In the Last Will and Testament, she states, "I give, devise and bequeath any bank accounts which have my name on it to my mother." Who gets the $50,000.00 in the bank account?
A. _____Mary's mother since that is what Mary's Last Will and Testament states.
B._____ Mary's mother and Ed each get one half of the money.
C._____ Ed gets all the money
D._____ Ed gets any money he put into the account, and Mary's mother gets the rest.

7. Which is the correct statement concerning environmental regulation in the United States:
A._____ The Federal Government, through the EPA, has the exclusive control over environmental regulations.
B._____ The Federal Government, through the EPA, and working with state governments, regulates the environment.
C._____ The U.S.Supreme Court has exclusive control over environmental matters.
D._____ Neither A, B, or C is correct.

8. Tony is at Bobby's Barber Shop for a shave and a haircut. After Bobby is finished, Tony pays Bobby. They start to chat and then Tony, knowing Bobby's fondness for baseball, shows Bobby his mint conditioned 1956 baseball card of Mickey Mantle. Bobby takes the card to admire it, but then Tony starts to talk with another customer about baseball. Tony then leaves the shop, forgetting that the baseball card is still with Bobby. Bobby makes a mental note to call Tony to return and retrieve his baseball card and lays the card on the counter with his barber tools and paraphernalia. Later in the day, he accidentally knocks the card onto the floor. Bobby leaves the shop for the day, with instructions to Clem, another barber, to lock up for the night. While sweeping the floor, Clem finds the baseball card and puts it in his pocket. Which of the following is the correct statement of the law regarding this situation?
A._____ Tony has lost all rights to the card since he left it at the barber shop.
B._____ Clem has the right to the card since he found it.
C._____ Bobby has the right to the card since it was found in his shop.

9. Joan is 80 years old and expects to die within the next six months. She wants to make sure her favorite niece, Sally, gets her diamond ring. While visiting one day, Joan says to Sally, "I want you to have my ring when I die, so I will keep it hidden under the rug for you. After I'm gone, come on by and get it." Sally says, "I accept your gift. Thank you." Joan dies a month later. Her Last Will and Testament says that Suzie, another niece, is to get the ring. Who gets the ring?
A._____ Both Suzie and Sally must share the ring.
B._____ Suzie gets the ring
C._____ Sally gets the ring.
D._____ Neither of them will get the ring.

10._____You write a check to your bank to pay your credit card bill. In that capacity you are known as what?
A_____ Maker
B.____ Endorser
C.____ Payee
D.____ Drawee.

11. Compulsory bargaining issues under the National Labor Relations Act are those issues concerned with:
A._____ Wages and hours
B._____ Management style
C._____ Team leadership
D._____ Both A and B

12. You are in charge of employment testing at your company. In one recent test, you determine that 100 applicants took the test. Thirty of the applicants failed the test. Upon further research, you determine that 25 of the 30 applicants who failed were African American, while 5 of the remaining applicants who failed were a mix of Caucasian, Asian, and Latino. To determine if your test is valid, you would look up rules dealing with:
A._____ Disparate Impact
B._____ Unfair labor practices
C._____ Right to Work
D._____ Sexual Harassment

13. You go to work in the morning and park your car in the public garage. The legal relationship you have entered into with the garage is called what?
A._____A tenant in common relationship
B._____A Bailment
C._____A joint tenancy
D._____A partnership

14. You have more debt than you have assets. You would like to seek a complete discharge of your debts via bankruptcy. The petition you would file is called what.
A._____ Chapter 7
B._____ Chapter 11
C._____ Chapter 13
D._____ Chapter 20

15._____In question 4 above, the legal term which describes Irma, after receiving the check from Sharon, is what.
A._____A lien holder
B._____A buyer in the ordinary course of business
C._____A holder in due course
D._____A maker

16. You buy a house with your domestic partner. You want your children to get half the house when you die. You agree that the children of your domestic partner should get her half of the house when she dies. The type of ownership you should establish on the deed to the real estate is called what.
A._____ Joint tenancy
B._____ Tenants in common
C._____ Tenants by the entirety
D._____ A life estate

17. You take your car to your mechanic for repair. After it's repaired, you are unable to pay, so the mechanic keeps the car until you can pay. His legal right to do so comes from what?
A._____ Article 3 of the UCC
B._____ Article 4 of the UCC
C._____ Chapter 7 of the Bankruptcy Code
D._____ The law governing liens

18. You receive your paycheck and endorse it before you get to the bank. You also write on the back of the check "for deposit only." The legal description of what you wrote is called what.
A. _____Blank Endorsement
B._____ Restrictive Endorsement
C. _____Bearer Endorsement
D._____ Qualified Endorsement

19. You receive a piece of paper in which Larry promises to pay for your college tuition. The writing is covered by what part of the law.
A._____ Article 3 of the UCC
B._____ Article 4 of the UCC
C._____ Article 9 of the UCC
D. _____Chapter 13 of the Bankruptcy Code

20. Your landlord asks if he (the landlord) can store some of his property in the residence he has rented to you. He also asks you to keep an eye on it from time to time. The relationship you have entered is called what.
A. _____Debtor-Creditor
B. _____Bailment
C._____ Joint Tenancy
D. _____A Payer-Payee Relationship

21. The Acme Life Insurance Company sends out 5,000 emails to prospective customers to announce that it has just hired Frank Unctious as its newest sales representative. Joan receives one of the emails and, being in the market for life insurance, calls Frank to set up an appointment. Frank stops by her house, and they discuss life insurance options. Joan says she will think it over and get back in touch. A few weeks go by, during which time Acme become disenchanted with Frank's inability to increase sales. Acme then fires Frank. After he leaves the office, Frank calls Joan to see if she has decided on a life insurance policy. He doesn't mention that he has just been fired. Joan says that she wants to purchase a policy, and Frank sets up a time that afternoon to stop by to visit Joan. He fills out the correct forms, which he still has in his briefcase, and stops by Joan's house. She signs the forms and gives Frank a deposit of $1,000.00. Frank tells Joan that she will receive the official policy in the mail in a few weeks but, since she paid the deposit, she is now covered (and assumes that is a correct statement of how life insurance policies work). Frank manages to cash the check, which was made payable to Acme, and leaves town. A week later, Joan dies. Her heirs find the life insurance papers and make a claim for the proceeds to Acme. Which is the correct statement of the law concerning the outcome of this case?
A._____ Acme will probably not have to pay on the policy because Frank did not have express authority to sell the policy by virtue of being fired.
B._____ Acme will probably have to pay on the policy because Frank had the apparent authority to sell life insurance policies.
C. ____ Acme will probably have to pay half of the policy since it was only partially responsible for the mistake.

22. Kim has been in America for a short time and decides to open a restaurant serving authentic Chinese cuisine in a facility with traditional Chinese d├ęcor. To complete the authenticity of the environment, Kim decides to hire employees that are only of Asian descent, requiring them to wear traditional Chinese apparel. This decision includes kitchen employees as well as hosting and serving employees. One day a female Caucasian woman and a male Caucasian man who are married to each other apply for positions as server and cook, respectively. Kim refuses to hire either, although both are extremely qualified for the positions, indicating that they do not qualify for the jobs due, specifically, to their not being Asian. When they are denied the positions for the stated reasons, the couple plan sue Kim for discrimination on the basis of national origin. What is a correct statement of the law regarding this situation?
A._____ Title VII of the Civil Rights Act prohibits discrimination based on national origin, but Kim will win the case because Title VII does not protect Caucasians but only those from countries other than the United States.
B._____ Title VII of the Civil Rights Act prohibits discrimination based on national origin, and Kim will lose the case because he is practicing disparate treatment based on national origin
C._____ Title VII of the Civil Rights Act prohibits discrimination based on national origin, but Kim might win the case if he can establish that his requirement that all employees be Asian is a bona fide occupational qualification.
D._____ Title VII of the Civil Rights Act does not prohibit discrimination based on national origin, so Kim does not have any legal concerns.

23. Title VII of the Civil Rights Act covers:
A._____ All forms of illegal discrimination
B._____ Discrimination based on age, race, color, religion, national origin and sex
C._____ Discrimination based on age, race, color, religion, national origin sex, and disability
D._____ Discrimination based on race, color, religion, national origin and sex.

24. Benny has a stuttering problem and speaks in a very high pitched voice. In addition, he tends to have many effeminate traits. Thinking he is gay, many of his coworkers, all of whom are men, tease him with off color "gay" jokes. Benny complains to the boss, who does nothing to stop the other workers from teasing Benny. Fed up, Benny quits his job and then files a claim of sexual harassment with the EEOC against the employer. Which of the following is the correct statement of the law?
A._____ Benny has no claim for sexual harassment since no one propositioned him for sexual favors.
B._____ Benny has no claim for sexual harassment since the law only protects women from sexual harassment.
C._____ Benny might have a claim for sexual harassment if he can prove that the harassment was based on his gender rather than his sexual orientation.
D. _____Benny quit his job, so he has no right to file a claim for sexual harassment.

25. To find out if your company is required to prepare an Environmental Impact Statement, which government agency would you contact?
A._____EEOC
B._____EPA
C._____NLRB
D._____FMLA

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1. Betty and Aaron plan to form a small business, the purpose of which will be to market various computer games. If Betty is concerned with personal liability, should something go wrong in the business, she should convince Aaron to form the business as a:
A._____ Sole proprietorship
B._____ Partnership
C._____ Corporation
C._____ Corporation. In a corporation the personal liability is limited.

2. Smith and Jones are partners in a small accounting firm. Smith makes some serious errors on Lloyd's tax return, which makes Lloyd liable to the IRS for monetary penalties and interest. Which of the following statements is true should Lloyd choose to sue for damages?
A._____ He can only sue Smith, since Smith prepared the tax returns and made the errors.
B._____ He can sue Smith and Jones, but only if Jones helped in some way to prepare the tax return.
C._____ He can sue Smith and Jones, since they are partners.
D._____ He can't sue either of them.
C._____ He can sue Smith and Jones, since they are partners. In a partnership both Smith and Jones are liable. They are liable for the debts of the accounting firm.

3. Robert gives Peter a piece of paper which says, "I, Robert, owe Peter $2,500 for money he loaned to me in February, April, and June." Robert has signed the note. The legal term used for this piece of paper is:
A._____ Promissory Note
B._____ Check
C._____ Draft
D._____ Acknowledgment of Indebtedness
D._____ Acknowledgment of Indebtedness This is an IOU, or I owe you, a simple acknowledgement of indebtedness.

4. Sharon owes Irma $500.00. Sharon has just received a check made payable to her from the Ajax Company, for work Sharon performed for Ajax. She endorses the check and gives it to Irma in payment of her indebtedness to Irma. Ajax then notifies Sharon that it wants its check back because it discovered that Sharon had not completed the work for Ajax as originally thought. Who has the right to the check?
A._____ Ajax
B._____ Irma
C._____ Neither Irma nor Ajax
D._____ Sharon
B._____ Irma. She has properly received an endorsed check for money Sharon owed her.

5. With regard to the scenario in Question 4, if you were Irma, and Sharon was going to endorse the aforesaid check over to you, what steps would you recommend be followed in order to protect yourself in case the check was lost or misplaced.
A._____ Sharon should endorse the check and give it to Irma.
B______ Sharon should write the following words on the back of the check "Pay to the order of Irma" and then endorse it and give it to Irma
C._____ Sharon should write the following words on the back of the check "Pay to the order of Irma" and then endorse it and give it to Irma. Irma should then immediately sign her name to it also.
Sharon should write the following words on the back of the check "Pay to the order of Irma" and then endorse it and give it to Irma. Irma should then immediately sign her name to it also.. This will prevent another person by the name of Sharon from cashing the check.

6. Mary and Ed are domestic partners. They own a joint account at the local bank, which has a balance of $50,000.00. Most of the money was deposited into the account by Mary, who has the better paying job. Mary is killed in an automobile accident. When her estate is probated, it is discovered that she never updated her Last Will and Testament. In the Last Will and Testament, she states, "I give, devise and bequeath any bank accounts which have my name on it to my mother." Who gets the $50,000.00 in the bank account?
A. _____Mary's mother since that is what Mary's Last Will and Testament states.
B._____ Mary's mother and Ed each get one half of the money.
C._____ Ed gets all the money
D._____ Ed gets any money he put into the account, and Mary's mother gets the rest.
D._____ Ed gets any money he put into the account, and Mary's mother gets the rest. It is presumed that Mary would leave her money to her mother.

7. Which is the correct statement concerning environmental regulation in the United States:
A._____ The Federal Government, through the EPA, has the exclusive control over environmental regulations.
B._____ The Federal Government, through the EPA, and working with state governments, regulates the ...

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