Chap018 - Chapter 18 - Legal Issues: Recognizing Your Small...

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Chapter 18 - Legal Issues: Recognizing Your Small Business Needs Chapter 18 Legal Issues: Recognizing Your Small Business Needs True / False Questions 1. (p. 586) The United States has the most litigious society in the world. FALSE Difficulty: Medium 2. (p. 590) Clients and attorneys start with a natural conflict of interest related to money. TRUE Difficulty: Medium 3. (p. 590) When using a retainer approach, the attorney does not get paid until you get paid. FALSE Difficulty: Medium 4. (p. 590) There are two basic categories of information available to small business owners: free and paid. TRUE Difficulty: Medium 5. (p. 593) For start-ups, the most popular form of business is partnership. FALSE Difficulty: Medium 18-1
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Chapter 18 - Legal Issues: Recognizing Your Small Business Needs 6. (p. 594) Unless advised otherwise by your attorney, the best choice for a new small business is a "C corporation". FALSE Difficulty: Hard 7. (p. 594) The major advantage of sole proprietorship is that the legal entity is separate and distinct from its owners as individuals. FALSE Difficulty: Medium 8. (p. 595) The total liability issue in general partnerships is like that of sole proprietorship, therefore, partnerships are something to avoid. TRUE Difficulty: Hard 9. (p. 595) One disadvantage of a partnership form is the limited life. TRUE Difficulty: Medium 10. (p. 597) One of the major factors at play in the decision on the form of a business organization is the competitors form in the industry. FALSE Difficulty: Medium 18-2
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Chapter 18 - Legal Issues: Recognizing Your Small Business Needs 11. (p. 597) Of the newer business forms, the easiest to form and the most user-friendly is the network corporation. FALSE Difficulty: Hard 12. (p. 598) If the business is a corporation or an LLC, the owner can "only" lose what he or she has in the business. TRUE Difficulty: Medium 13. (p. 598) In business negotiations, if one side wins, the other side loses. FALSE Difficulty: Hard 14. (p. 600) Torts can arise when a person's legal rights are violated in ways other than from a breach of contract. TRUE Difficulty: Medium 15. (p. 602) Unfortunately, problems of contract or tort law can only be handled through litigation. FALSE Difficulty: Medium 18-3
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Chapter 18 - Legal Issues: Recognizing Your Small Business Needs 16. (p. 603) While mediation and court cases have decisions that are binding, arbitration works only if the two sides agree to the decision and settlement. FALSE Difficulty: Hard 17. (p. 604) When it comes right down to it, transactions between businesses and customers are an interchange of communications between people. TRUE Difficulty: Medium 18. (p. 605) Small businesses almost always do better before judges and almost never do better before arbitrators. Therefore, the court becomes a preferred choice for small business owners over arbitrators in contract disputes. FALSE
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Chap018 - Chapter 18 - Legal Issues: Recognizing Your Small...

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