IAB Business Law & Ethics 3

Question 1

In contract law, 'consideration' refers to:

Accepted Answer

Something of value exchanged between parties to make a contract binding

Answer

Consideration is a bargained-for exchange of something of value — it can be money, goods, a service, or a promise — that makes a contract legally binding.

Question 2

Which of the following best describes 'negligence' in a business law context?

Accepted Answer

Failure to exercise reasonable care that results in harm

Answer

Negligence occurs when a party fails to act with the standard of care a reasonable person would exercise, and this failure causes injury to another.

Question 3

A partnership agreement that does not specify profit distribution means profits are shared:

Accepted Answer

Equally among all partners by default

Answer

Under the Uniform Partnership Act, absent a contrary agreement, partners share profits and losses equally regardless of contribution levels.

Question 4

The Foreign Corrupt Practices Act (FCPA) makes it illegal for US companies to:

Accepted Answer

Pay bribes to foreign government officials to obtain business

Answer

The FCPA prohibits US persons and entities from paying bribes to foreign officials to obtain or retain business advantages.

Question 5

Which document formally creates a corporation and is filed with the state government?

Accepted Answer

Articles of incorporation

Answer

Articles of incorporation (also called a corporate charter) are the founding documents filed with the state that legally create a corporation.

(IAB) International Association of Bookkeepers Certification Practice Test

(IAB) International Association of Bookkeepers Certification Practice Test

IAB Business Law & Ethics 3