IAB Business Law & Ethics 4

Question 1

A sole proprietor's personal assets are at risk in a lawsuit against their business because of:

Accepted Answer

Unlimited personal liability

Answer

Sole proprietors face unlimited personal liability, meaning creditors and plaintiffs can pursue the owner's personal assets to satisfy business debts or judgments.

Question 2

In ethics, 'utilitarianism' as applied to business decisions means choosing actions that:

Accepted Answer

Produce the greatest good for the greatest number of people

Answer

Utilitarianism is a consequentialist ethical theory that judges actions based on whether they maximize overall well-being or utility across all affected parties.

Question 3

When a court 'pierces the corporate veil,' it means that:

Accepted Answer

Shareholders are held personally liable for corporate debts

Answer

Piercing the corporate veil allows courts to hold shareholders personally liable when they have abused the corporate form, for example by commingling personal and business funds.

Question 4

A 'void' contract differs from a 'voidable' contract in that a void contract:

Accepted Answer

Has no legal effect and cannot be ratified by either party

Answer

A void contract has no legal force from the outset (e.g., a contract for illegal activity), while a voidable contract is valid until one party chooses to rescind it.

Question 5

Under the Fair Labor Standards Act (FLSA), non-exempt employees must be paid overtime at what rate for hours worked over 40 in a workweek?

Accepted Answer

1.5 times their regular rate

Answer

The FLSA requires that non-exempt employees receive overtime pay of at least 1.5 times (time and a half) their regular hourly rate for all hours worked beyond 40 in a workweek.

(IAB) International Association of Bookkeepers Certification Practice Test

(IAB) International Association of Bookkeepers Certification Practice Test

IAB Business Law & Ethics 4