CH 17
Ted's business, situated near the Missouri River, was partially destroyed when the river overflowed after a deluge. Which of the following measures would've helped Ted minimize the effect of the flood from interrupting the operations of his business? A. Creating provisions for subcontracting work B. Developing an informal code of ethics for all employees to follow C. Ensuring that all employees have easy access to all assets D. Securing valuable assets from low-level employees
A. Creating provisions for subcontracting work
Which of the following is true of the ADA Technical Assistance Program? A. It provides specific advice to a business concerning how to comply with the pertinent requirements. B. It provides inspection of the workplace to determine compliance. C. It provides affirmation services to all businesses. D. It provides its services only to large businesses that have more than 500 employees.
A. It provides specific advice to a business concerning how to comply with the pertinent requirements.
Which of the following is an example of a special type of liability insurance that covers losses from harm caused during the performance of a profession? A. Unemployment insurance B. Errors and omissions insurance C. Disability insurance D. Worker's compensation insurance
B. Errors and omissions insurance
Which of the following statements is true of joint ventures? A. It requires both partners involved to allocate revenues and expenses equally between them. B. It is not considered a separate entity from any of the partners that own it. C. It does not require its partners to lose more than what each partner has invested in it. D. It is never taxed as a partnership.
C. It does not require its partners to lose more than what each partner has invested in it.
The _____ is a series of acts by Congress that prohibit discrimination on the basis of race, color, religion, sex, or national origin. A. Civil Rights Act of 1991 B. Age Discrimination in Employment Act of 1967 C. Americans with Disabilities Act of 1990 D. Rehabilitation Act of 1973
A. Civil Rights Act of 1991
_____ is the source of the largest amount of employee theft. A. Employee collusion B. Employee intoxication C. Adverse possession D. Employee nonfeasance
A. Employee collusion
_____ is the most common kind of coverage on key persons of a business. A. Life insurance B. Health insurance C. Dental insurance D. Credit insurance
A. Life insurance
Which of the following steps would help decrease business risks? A. Making specific plans for and arrangements to deal with foreseeable events B. Assuming employees will follow basic workplace etiquettes without a written code of conduct C. Ensuring employees have easy access to valuable assets D. Having separate codes of conduct for employees at different tiers of the management
A. Making specific plans for and arrangements to deal with foreseeable events
Which of the following should be included in an employee contract for a key employee? A. Offer rewards for providing adequate termination notice B. Specify that the employee must work at the organization for a minimum of two years C. Detail the consequences of insubordination within the workplace D. Encourage employees to poach clients from competitors
A. Offer rewards for providing adequate termination notice
Julia recently set up a factory that manufactures shoes. To ensure that her business complies with the basic OSHA regulations, which of the following steps should she take? A. She must provide medical examinations for all her employees. B. She must set up a system that reports any workplace accident within 72 hours. C. She must request the Technical Assistance Program to conduct an inspection of her factory. D. She must make her employees aware of all the EEOC rules that pertain to her business.
A. She must provide medical examinations for all her employees.
____ insurance is normally included in insurance on physical assets. A. Theft B. Credit C. Intellectual property D. Safety
A. Theft
Which of the following represents the problem with legal protection methods for intellectual property? A. There is no governmental agency that will assist small business owners in maintaining their legal rights. B. The cost of legal protection for intellectual property is so high that it is practically useless for a small business owner. C. Legal protection methods for intellectual property are primarily "reserved" for large businesses. D. Legal protection methods can only be offered for tangible property and not intellectual property. E. Holding legal rights to intellectual property provides the owner solely with grounds to pursue lawsuits against infringement.
A. There is no governmental agency that will assist small business owners in maintaining their legal rights.
Which of the following is true of insurance coverages? A. Vehicle liability insurance is mandated by the legislatures of all the states and territories of the United States. B. Workers' compensation insurance is mandatory in all the states and territories of the United States. C. Industries and businesses that have frequent seasonal layoffs pay lower amounts of unemployment premiums than do those that have stable employment. D. A fixed amount of unemployment insurance is collected from all industries.
A. Vehicle liability insurance is mandated by the legislatures of all the states and territories of the United States.
The level of probability that the future economic state of the business will be worse than expected is referred to as _____. A. business risk B. economic certainty C. business continuity D. business amortization
A. business risk
The Age Discrimination in Employment Act makes it illegal to: A. discriminate against people who are older than 40 years of age. B. employ minors at a workplace. C. provide preferential treatment to employees over 50 years of age. D. provide work opportunities to school students.
A. discriminate against people who are older than 40 years of age.
The risk from customers primarily arises from: A. injuries suffered while on business property. B. high prices of the products or services. C. discontent with the customer service provided by the business. D. not being provided credit to purchase products.
A. injuries suffered while on business property.
The most common mandatory insurance coverage includes: A. liability for damages caused by vehicle accidents. B. liability for loss of sales during recession. C. travel cancellation liability. D. damage at workplace caused by disgruntled employees.
A. liability for damages caused by vehicle accidents.
Payment for injury or damage that occurs during the use of a business's products is referred to as _____. A. product liability B. professional immunity C. product immunity D. personal liability
A. product liability
______ is a contract requirement that works to prevent property owners from deliberately underinsuring. A. Benchmarking B. Co-insurance C. Adverse possession D. Separation of duty
B. Co-insurance
_____ are contractual provisions of insurance policies that specify what risks the insurance company is assuming. A. Internal controls B. Coverages C. Separation of duties D. Premiums
B. Coverages
A contract between two or more parties in which one party agrees, for a fee, to assume the risk of another is called _____. A. coverage B. insurance C. separation of duties D. bailment
B. insurance
A(n) _____ is a valuable process that can greatly help an employer with the issues of keeping risks at acceptable levels. It is strictly a management tool which is not provided to outsiders; it can be structured and conducted in any systematic manner the owner finds acceptable. A. adverse possession B. internal audit C. external audit D. internal control
B. internal audit
Fidelity bonds help to: A. protect against losses from crimes committed against the business. B. cover losses incurred due to governmental audits. C. cover losses incurred by the employer due to employee embezzlement. D. cover abnormal losses from credit customers not paying their bills.
C. cover losses incurred by the employer due to employee embezzlement.
A(n) _____ is an amount of loss that is specifically excluded by the insurance contract. A. insurable value B. premium C. deductible D. coverage
C. deductible
Partnerships through which two or more businesses combine to undertake a specific economic activity are called _____. A. corporations B. sole proprietorships C. joint ventures D. S-corporations
C. joint ventures
States of being that are expressly prohibited from suffering discrimination are called _____. A. vulnerable groups B. endangered sections C. protected classes D. ethnic majorities
C. protected classes
A type of internal control that separates the physical control of an asset from the person accounting for that asset is called _____. A. asset liability B. adverse possession C. separation of duties D. separation of liabilities
C. separation of duties
A _____ is an agreement with an insurance or bonding company that will pay a specified amount in the event that the entity bonded fails to comply with specified contractual requirements. A. business interruption insurance B. credit insurance C. surety bond D. fidelity bond
C. surety bond
The first task to be completed before a comprehensive insurance program for a business can be developed is: A. to develop a financial plan. B. to assess internal strengths. C. to identify risks. D. to provide a business succession plan.
C. to identify risks.
______ occurs when the owner of real property does not enforce property rights and allows a nonowner to use the property as if it were his or her own. A. Abandonment B. Accession C. Property liability D. Adverse possession
D. Adverse possession
Which of the following helps limit risk from violation of tax regulations? A. The owner should make payments to creditors by borrowing from tax money. B. The owner should understate revenues and overstate deductible expenses. C. The owner should take cash from the businesses before it is recorded as revenue. D. The owner should hire an accountant and a lawyer who are expert in tax issues.
D. The owner should hire an accountant and a lawyer who are expert in tax issues.
The most common type of disability coverage is _____ which provides funds to the business to purchase the ownership position of a disabled partner. A. life insurance B. medical insurance C. credit insurance D. buyout insurance
D. buyout insurance
Liability insurance protects a business against: A. disgruntled former employees filing suites. B. current employees setting up businesses which turn into competition for the organization. C. losses incurred due to the death of a key employee. D. claims from harm caused by inadvertent consequences of actions of the business or its employees.
D. claims from harm caused by inadvertent consequences of actions of the business or its employees.
The most common form of _____ is the pilfering of items of small value, such as office supplies and small hand tools, or actions such as making copies for their children to use at school or otherwise using company resources to make personal items. A. violation of governmental regulations B. contract violation C. property risk D. employee theft
D. employee theft
Insurable value is defined as: A. the amount of an asset for which a company will write an insurance policy. B. the entire value of the property of a business. C. the value of the historical significance of a building. D. the amount of fees that a business has to pay to an insurance company.
A. the amount of an asset for which a company will write an insurance policy.
_____ are programs or pieces of equipment which serve as a barrier between a PC and the Internet. A. Ethernets B. Firewalls C. Hubs D. Spywares
B. Firewalls
Misappropriation of business property by employees of that business is referred to as: A. employee branding. B. employee theft. C. employee attrition. D. employee engagement.
B. employee theft.
Which of the following is true of insuring the property of a business? A. All the value of a property has insurable value. B. The value of land is the most commonly insured property. C. The value of the historical significance of a building often cannot be insured. D. The lower the deductible, the lower the policy premium payments will be.
C. The value of the historical significance of a building often cannot be insured.
The most common form of employee collusion is: A. selling trade secrets to competition. B. theft of cash and inventory. C. lying about work hours. D. lying about absences.
B. theft of cash and inventory.
_____ are used to pay losses that are not covered by other liability insurance. A. Unemployment insurance B. Worker's compensation insurance C. General liability insurance D. Product liability insurance
C. General liability insurance
Axion Inc. is a small business started by Robert. As the business grew, he decided to implement new company policies that would ensure that his employees are not encouraged to set up competition against Axion. Which of the following techniques should he adopt to achieve this? A. Lay off employees who seem most likely to go into competition with Axion B. Groom other candidates to replace the employees currently working at Axion C. Cross train the employees to neutralize job specialization D. Negotiate contracts with key employees that limit their freedom to go into competition
D. Negotiate contracts with key employees that limit their freedom to go into competition
Which of the following statements is true regarding the OSHA Act? A. It covers employees in mining, transportation, and state and local governments. B. OSHA offers consultation services to employers for a fee. C. It requires businesses to report any accidents that result in a fatality or in the hospitalization of three or more employees within 24 hours. D. OSHA-defined "low-hazard" industries are exempt from the record keeping requirements of the regulations.
D. OSHA-defined "low-hazard" industries are exempt from the record keeping requirements of the regulations.
_____ are programs designed to report on a user's keystrokes or data, or give remote control of a PC to others. A. Hubs B. Firewalls C. Viruses D. Spyware
D. Spyware
Which of the following acts provide training for workers who are injured on the job? A. The Age Discrimination in Employment Act of 1967 B. The Americans with Disabilities Act of 1990 C. The Civil Rights Act of 1991 D. The Rehabilitation Act of 1973
D. The Rehabilitation Act of 1973
Which of the following is a protected class established by the EEOC? A. Age B. Sex C. Marital status D. Political affiliation
B. Sex
The most highly desired form of insurance for most employees is _____. A. life insurance B. medical insurance C. credit insurance D. disability insurance
B. medical insurance
_____ repay employers for losses caused by dishonest or negligent employees. A. Credit insurance B. Business interruption insurance C. Surety bonds D. Fidelity bonds
D. Fidelity bonds
The computers at a graphics design company were stolen recently. Which of the following insurance that the company holds will repay the losses incurred? A. Product liability insurance B. Crime insurance C. Surety bonds D. Credit insurance
B. Crime insurance
Which of the following is a risk specific to dentists and physicians? A. Business interruption B. Malpractice claims C. Errors and omissions claims D. Product liability claims
B. Malpractice claims
_____ are laws and regulations that specify the requirements of taxation. A. Tax charts B. Tax slabs C. Tax codes D. Tax exempts
C. Tax codes
_____ refers to a set of rules and procedures that work to limit the opportunity for employee theft or malfeasance. A. Internal audit B. Internal control C. Malfeasance in office D. Insider trading
B. Internal control
Which of the following is true of co-insurance? A. It is an amount of loss that is specifically excluded by the insurance contract. B. It requires that an owner carry insurance equal to a stated minimum percentage of the market value of their property. C. It results in the decrease of the amount of premium that the insurance company collects from businesses. D. It is the amount of an asset for which a company will write an insurance policy.
B. It requires that an owner carry insurance equal to a stated minimum percentage of the market value of their property.
Which one of the following government agencies was created to enforce safety in the workplace? A. EEOC B. OSHA C. SBA D. IRS
B. OSHA
Which of the following should be undertaken in order to reduce a business's exposure to the risk of violating tax regulations? A. Understate revenues and overstate deductible expenses B. Reconcile the cash register tape to the cash register contents every day C. Take cash from the businesses before it is recorded as revenue D. Borrow from tax money in order to make payments to creditors
B. Reconcile the cash register tape to the cash register contents every day
Martin, an employee at a boutique store, is required to handle store displays and also ensure that all the sales records tally at the end of each business day. However, he committed fraud by recording fake sales and then keeping the products to himself. Which of the following managerial concepts would have helped the store avoid this deception? A. Adverse possession B. Separation of duties C. Accession D. Rule against perpetuities
B. Separation of duties
Crux Inc. and Synapse Inc. are two competing businesses in the same city. They use the services of the same insurance company and have taken the same policy. Crux has a higher deductible than Synapse for the policy. Which of the following statements would be true in this case? A. Both companies are not paying any premium. B. Synapse pays a higher premium than Crux. C. Both the companies pay the same premium. D. Crux pays a higher premium than Synapse.
B. Synapse pays a higher premium than Crux.
Jacob often manipulates charges on his travel expenses to indicate higher amounts when he travels for the company he works for. Trent, the accounts manager, accepts fake bills and assists Jacob in deceiving the company. They split the profits made this way. This is an example of theft by: A. adverse possession. B. employee collusion. C. employee nonfeasance. D. vendor fraud.
B. employee collusion.
Which of the following helps manage risks to physical assets of a business? A. Employees should be allowed easy access of physical assets to assist them with their work. B. Inspections should be deemed necessary only when an item is reported missing. C. A manager's signature must be required to confirm that an item has been returned to its proper storage. D. Only clerical-level employees need to sign for removing items from storage.
C. A manager's signature must be required to confirm that an item has been returned to its proper storage.
_____ provides funds to pay the ordinary operating expenses of a business should it be forced to close temporarily because of an insured event. A. Crime insurance B. Theft insurance C. Business interruption insurance D. Product liability insurance
C. Business interruption insurance
Which of the following is true regarding buyout insurance? A. It is usually provided as a stand-alone policy. B. It is only applicable for large businesses. C. It is a type of disability insurance. D. It is the most highly desired form of insurance for most employees.
C. It is a type of disability insurance.
Which of the following statements is true regarding credit insurance? A. It does not cover losses from credit customers not paying their bills. B. It refers to credit provided by merchants to their customers on purchased products. C. It requires the merchant to provide co-insurance in the amount of 10 to 20 percent of the credit loss. D. It is only available to retailers.
C. It requires the merchant to provide co-insurance in the amount of 10 to 20 percent of the credit loss.
Which of the following practices should be adopted to ensure that a computer is kept secure? A. Writing down all your passwords where it's easily accessible B. Using the same password for long durations C. Setting a PC to lock itself up after a few minutes of inactivity D. Opening downloads from unexpected sources
C. Setting a PC to lock itself up after a few minutes of inactivity
_____ is a form of insurance that does not accumulate any value over the contract period. A. Buyout insurance B. Life insurance C. Term insurance D. Period insurance
C. Term insurance
Which of the following is true of using internal audits to manage risk? A. Every small business owners conduct internal audits on their own. B. Internal audits have a fixed structure decided by the government and all employers are required to comply. C. The owner should provide sufficient authority to the auditor to ensure that he or she can accomplish the goals of the audit. D. The owner should accept that the auditor has final authority when it comes to approving the audit plan.
C. The owner should provide sufficient authority to the auditor to ensure that he or she can accomplish the goals of the audit.
According to the Wells Report submitted by the Association of Certified Fraud Examiners, what is the number one method for fraud detection? A. Internal audits B. Internal controls C. Tips D. External audits
C. Tips
Ted, a 46-year-old IT professional, recently attended a job interview at Acton Org. He was not offered the job. Ted tried to find the reasons for his disqualification and the company could not provide a satisfactory explanation. He later learned that he was refused the job due to his age as the job position was offered to a 23-year-old who had just graduated from college. Which of the following laws protect Ted from such discriminations? A. ADA B. OSHA laws C. Sarbanes-Oxley Act D. ADEA
D. ADEA
Which of the following is true of offering direct credit to customers? A. It discredits the business's reputation. B. It always decreases business risk. C. It ensures on-time payment from customers. D. It increases sales for the business.
D. It increases sales for the business.
_____ refers to laws and governmental rules that limit the freedom of business owners to manage their businesses as they please. A. Employee branding B. Benchmarking C. Arraignment D. Regulation of the workplace
D. Regulation of the workplace
Which of the following is true of insurance? A. All risks are insurable. B. An insurance company only charges a fee for large businesses with over 100 employees. C. Insurance companies make profits by requiring a relatively large fee compared to the amount of loss that is possible. D. The insurance company makes a profit by collecting premiums from many businesses for the same set of risks.
D. The insurance company makes a profit by collecting premiums from many businesses for the same set of risks.
Restaurants, clothing retailers, barbers, and beauticians face relatively low risks of loss from nonpayment because: A. most customers prefer making upfront payments for such products and services. B. few people have credit cards which limits their ability to buy products. C. they only offer credit to loyal customers who they are sure will repay the amount. D. most of them provide credit only by accepting credit cards, which reduces the risk of nonpayment.
D. most of them provide credit only by accepting credit cards, which reduces the risk of nonpayment.
