IAB Business Law & Ethics 2

Question 1

Under the Uniform Commercial Code (UCC), a contract for the sale of goods worth $500 or more must be:

Accepted Answer

In writing to be enforceable

Answer

The UCC Statute of Frauds requires contracts for the sale of goods of $500 or more to be evidenced by a writing signed by the party to be charged.

Question 2

A bookkeeper discovers their employer has been systematically underpaying employees. The most ethical first course of action is to:

Accepted Answer

Document the discrepancy and raise it internally with management or HR

Answer

Ethical practice requires documenting concerns and raising them through appropriate internal channels before escalating externally.

Question 3

Which type of business structure provides limited liability to all owners while allowing profits to be taxed only at the individual level?

Accepted Answer

Limited Liability Company (LLC)

Answer

An LLC combines limited liability protection for all members with pass-through taxation, avoiding the double taxation of a C-Corporation.

Question 4

An 'apparent authority' in agency law arises when:

Accepted Answer

A third party reasonably believes an agent has authority based on the principal's conduct

Answer

Apparent authority exists when a principal's words or actions lead a third party to reasonably believe the agent is authorized to act.

Question 5

The concept of 'privity of contract' traditionally means that:

Accepted Answer

Only parties to a contract can sue to enforce it

Answer

Privity of contract is the principle that only parties who are direct parties to a contract have enforceable rights or obligations under it.

(IAB) International Association of Bookkeepers Certification Practice Test