CBA CBA Business Law & Regulatory Compliance 1 — Questions and Answers
Question 1: Which federal agency is primarily responsible for enforcing securities laws that affect small businesses seeking outside investors?
- Federal Trade Commission (FTC)
- Securities and Exchange Commission (SEC) (Correct answer)
- Small Business Administration (SBA)
- Consumer Financial Protection Bureau (CFPB)
Correct answer: Securities and Exchange Commission (SEC)
The SEC enforces federal securities laws, including registration requirements and disclosure rules that businesses must follow when offering securities to investors.
Question 2: A sole proprietorship differs from an LLC primarily because the sole proprietor:
- Pays lower federal income tax rates
- Has unlimited personal liability for business debts (Correct answer)
- Cannot hire employees
- Must register with the SEC
Correct answer: Has unlimited personal liability for business debts
Unlike LLC members, a sole proprietor has unlimited personal liability, meaning personal assets can be seized to satisfy business debts and judgments.
Question 3: Under the Americans with Disabilities Act (ADA), which of the following businesses is generally required to provide reasonable accommodations?
- Any business with at least 15 employees (Correct answer)
- Only businesses with annual revenue over $1 million
- Only federal contractors
- Businesses with more than 500 employees only
Correct answer: Any business with at least 15 employees
Title I of the ADA applies to employers with 15 or more employees, requiring reasonable accommodations for qualified individuals with disabilities.
Question 4: Which document establishes the internal governance rules for a corporation, including how meetings are conducted and officer roles?
- Articles of Incorporation
- Operating Agreement
- Bylaws (Correct answer)
- Certificate of Authority
Correct answer: Bylaws
Corporate bylaws serve as the internal rulebook governing how the corporation operates, including meeting procedures, voting rights, and officer responsibilities.
Question 5: An employer who misclassifies a worker as an independent contractor instead of an employee may face liability for unpaid:
- Sales taxes and import duties
- Payroll taxes, benefits, and overtime wages (Correct answer)
- Licensing fees and permits
- Corporate income taxes only
Correct answer: Payroll taxes, benefits, and overtime wages
Misclassification exposes employers to back payroll taxes (FICA), overtime under FLSA, and benefits that employees would have been entitled to receive.
Question 6: Which intellectual property protection is most appropriate for a new invention that provides a unique technical solution to a problem?
- Trademark
- Copyright
- Trade secret
- Utility patent (Correct answer)
Correct answer: Utility patent
A utility patent protects new inventions and functional discoveries, granting exclusive rights to make, use, and sell the invention for up to 20 years.
CBA CBA Business Law & Regulatory Compliance 1
Which federal agency is primarily responsible for enforcing securities laws that affect small businesses seeking outside investors?