Small Business Management: An Entrepreneur’s Guidebook 8th Edition – Test Bank

1.

_____ is a body of laws passed by federal, state, and local governments. 
 

A.  Common law

B.  Police law

C.  Judicial law

D.  Statutory law

2.

Which clause gives the U.S. Congress the right to “regulate commerce with foreign nations, and among the several states”? 
 

A.  Free exercise clause

B.  Interstate commerce clause

C.  Copyright clause

D.  Contracts clause

3.

Which of the following statements is true of police power? 
 

A.  It allows the state to regulate commerce with foreign nations and among the several states.

B.  It is the right to use the force of the state to promote the general welfare of citizens.

C.  It is an unwritten law derived from judicial decisions based on acceptable customs.

D.  It entitles each and every citizen to a day in court.

4.

Which of the following statements is true of criminal law? 
 

A.  It deals with penalizing those who commit illegal acts.

B.  It deals with the rights and powers of the government.

C.  It implies that everyone is entitled to a day in court.

D.  It is an unwritten law derived from judicial decisions.

5.

_____ law is administered between two or more citizens. 
 

A.  Public

B.  Criminal

C.  Private

D.  Civil

6.

The Uniform Commercial Code is a set of uniform model statutes to: 
 

A.  govern business and commercial transactions.

B.  address a wrongful injury.

C.  negotiate new business contracts.

D.  reorganize a bankrupt business.

7.

_____ is defined as a wrongful act by one party that results in injury to a second party’s person, property or reputation for which the first party is liable. 
 

A.  Malice

B.  A deed

C.  Hostility

D.  A tort

8.

Bankruptcy is defined as _____. 
 

A.  a wrongful act by one party that results in injury to a second party’s person, property, or reputation

B.  a legal process by which the lender takes away the borrower’s right to a property

C.  a body of laws passed by federal, state, and local governments

D.  a formal legal condition of inability to repay debts

9.

Identify a true statement about bankruptcy? 
 

A.  When one or more creditors file the bankruptcy petition against the debtor, it’s called ordinary bankruptcy.

B.  Chapter 11 of the Bankruptcy Reform Act of 1978 contains a provision for reorganizing the bankrupt business only when the petition filed is voluntary.

C.  Involuntary bankruptcy occurs when a debtor files an application with a court claiming that debts exceed assets and asks to be declared bankrupt.

D.  Under bankruptcy law, people or businesses can petition the courts to be relieved of the obligation to pay debts they cannot repay.

10.

Which of the following statements is true of Chapter 11 of the Bankruptcy Reform Act of 1978? 
 

A.  A firm that files for bankruptcy protection cannot operate while its debts are being repaid.

B.  Society should compensate those who have suffered an injury as a result of wrongful action(s) by others.

C.  If a business is so far gone that it cannot keep operating, it must be liquidated.

D.  A bankrupt business can be reorganized only when the bankruptcy petition is filed voluntarily.

11.

The function of the Small Business Administration is to: 
 

A.  protect consumers from undesirable effects of poorly produced products of small businesses.

B.  enforce pollution control standards for small businesses.

C.  provide direct and guaranteed loans to small businesses.

D.  provide demographic information to small businesses.