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Chapter 1
Introduction to Law and
Legal Reasoning
TRUE/FALSE QUESTIONS
1.
The stability and predictability created by the law is essential to business
activities.
ANSWER: T
PAGE: 2
TYPE:
Objective: AACSB Analytic Skill Level: AICPA Critical
Thinking
2.
Law is a body of enforceable rules governing relationships among
individuals and between individuals and their society.
ANSWER: T
PAGE:
Objective: AACSB Analytic
3.
2
TYPE: =
Skill Level: AICPA Legal
The natural law philosopher believes that formal law is inferior to
universal moral and ethical principles that are part of human nature.
ANSWER: T
Objective: AACSB Ethics
4.
=
PAGE:
3
TYPE: =
Skill Level: AICPA Critical
Thinking
Constitutional law includes only the U.S. Constitution.
ANSWER: F
PAGE:
Objective: AACSB Analytic
6
TYPE: =
Skill Level: AICPA Legal
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2
TEST BANK 1—UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS
5.
A state law that conflicts with the U.S. Constitution will be deemed
unconstitutional.
ANSWER: T
PAGE:
Objective: AACSB Analytic
6
TYPE: =
Skill Level: AICPA Legal
CHAPTER 1: INTRODUCTION TO LAW AND LEGAL REASONING
6.
To determine whether a law is constitutional, a court will only look at the
law’s source.
ANSWER: F
PAGE:
Objective: AACSB Analytic
7.
6
TYPE: =
Skill Level: AICPA Legal
Every state has adopted the Uniform Commercial Code in its entirety.
ANSWER: F
PAGE:
Objective: AACSB Reflective
11.
6
TYPE: N
Skill Level: AICPA Legal
Statutory law does not include county ordinances.
ANSWER: F
PAGE:
Objective: AACSB Reflective
10.
6
TYPE: N
Skill Level: AICPA Legal
State constitutions are supreme within their respective borders.
ANSWER: T
PAGE:
Objective: AACSB Analytic
9.
6
TYPE: =
Skill Level: AICPA Legal
Uniform laws apply in all states, including those in which the laws have
not been adopted.
ANSWER: F
PAGE:
Objective: AACSB Analytic
8.
7
TYPE: N
Skill Level: AICPA Legal
Common law is a term for law that is common throughout the world.
ANSWER: F
PAGE: 8
TYPE:
Objective: AACSB Analytic Skill Level: AICPA Critical
Thinking
12.
=
Damages is the normal remedy at law today.
ANSWER: T
PAGE:
Objective: AACSB Analytic
13.
3
8
TYPE: =
Skill Level: AICPA Legal
Equitable remedies include injunctions and decrees of specific performance.
ANSWER: T
PAGE:
Objective: AACSB Analytic
8
TYPE: =
Skill Level: AICPA Legal
4
TEST BANK 1—UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS
14.
In most states, a court cannot grant a legal remedy and an equitable
remedy in the same case.
ANSWER: F
PAGE:
Objective: AACSB Analytic
9
TYPE: +
Skill Level: AICPA Legal
CHAPTER 1: INTRODUCTION TO LAW AND LEGAL REASONING
15.
Judges use precedent when deciding a case in a common law legal system.
ANSWER: T
PAGE:
Objective: AACSB Analytic
16.
13
TYPE: =
Skill Level: AICPA Legal
Criminal law focuses on duties that exist between persons.
ANSWER: F
PAGE:
Objective: AACSB Analytic
19.
10
TYPE: =
Skill Level: AICPA Critical
Thinking
How the courts interpret a statute determines how that statute is applied.
ANSWER: T
PAGE:
Objective: AACSB Analytic
18.
10
TYPE: =
Skill Level: AICPA Legal
Courts do not depart from precedents.
ANSWER: F
PAGE:
Objective: AACSB Reflective
17.
14
TYPE: =
Skill Level: AICPA Legal
A reference to “9 U.S.C. Section 4” means that a statute can be found on
page 9 of section 4 of the United States Code.
ANSWER: F
PAGE: 15
TYPE:
Objective: AACSB Analytic Skill Level: AICPA Research
20.
=
Most state trial court decisions are not published.
ANSWER: T
PAGE: 16
TYPE:
Objective: AACSB Analytic Skill Level: AICPA Research
+
MULTIPLE CHOICE QUESTIONS
1.
5
Alan is a judge. The function of Alan and other judges is to
a.
b.
c.
d.
decide cases on the basis of their opinions about the issues.
decide cases on the basis of their personal philosophical views.
interpret and apply the laws.
make the laws.
6
TEST BANK 1—UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS
ANSWER: C
PAGE:
Objective: AACSB Reflective
2
TYPE: N
Skill Level: AICPA Critical
Thinking
CHAPTER 1: INTRODUCTION TO LAW AND LEGAL REASONING
2.
Voters in North Carolina approve a new state constitution, after which the
Ocean City Council passes new ordinances, the North Carolina Department
of Parks and Recreation issues new rules, and the Ocean City Chamber of
Commerce sends out new instructions. Sources of law do not include
a.
b.
c.
d.
ordinances passed by the Ocean City Council.
instructions issued by the Ocean City Chamber of Commerce.
rules issued by the North Carolina Department of Parks and
Recreation.
state constitutions passed by popular vote.
ANSWER: B
PAGE:
Objective: AACSB Reflective
3.
a case decided by the Nebraska Supreme Court.
a provision in the Nebraska constitution.
a rule created by a Nebraska state administrative agency.
a statute enacted by the Nebraska legislature.
ANSWER: B
PAGE:
Objective: AACSB Reflective
6
TYPE: =
Skill Level: AICPA Legal
Hawaii enacts a state law that violates the U.S. Constitution. This law can
be enforced by
a.
b.
c.
d.
no one.
the federal government only.
the state of Hawaii only.
the United States Supreme Court only.
ANSWER: A
PAGE:
Objective: AACSB Reflective
5.
6
TYPE: +
Skill Level: AICPA Legal
In Nebraska, the superior (highest-ranking) law is
a.
b.
c.
d.
4.
7
6
TYPE: +
Skill Level: AICPA Legal
The Federal Trade Commission is a government agency that issues rules,
orders, and decisions. The Georgia state legislature enacts statutes. The
Jackson County Board and the Peach City Council enacts ordinances.
Administrative law includes which of the following?
a.
b.
c.
All law that affects a business’s operation.
The rules, orders, and decisions of the Federal Trade Commission.
Statutes enacted by the Georgia state legislature.
8
TEST BANK 1—UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS
d.
Ordinances created by the Jackson County Board and the city council
of Peach City, Georgia.
ANSWER: B
PAGE:
Objective: AACSB Reflective
7
TYPE: +
Skill Level: AICPA Legal
CHAPTER 1: INTRODUCTION TO LAW AND LEGAL REASONING
6.
In a suit against Kate, Lyle obtains specific performance. This is
a.
b.
c.
d.
an equitable remedy and a remedy at law.
an equitable remedy only.
a remedy at law only.
neither an equitable remedy nor a remedy at law.
ANSWER: B
PAGE:
Objective: AACSB Reflective
7.
decisions of the courts in legal disputes.
regulations issued by administrative agencies.
statutes enacted by Congress and the state legislatures.
uniform laws drafted by legal scholars.
ANSWER: A
PAGE:
Objective: AACSB Reflective
8
TYPE: +
Skill Level: AICPA Legal
The federal government and the state governments constitute the U.S. legal system. This system is based on the legal system of
a.
b.
c.
d.
Ancient Greece.
Ancient Rome.
England.
France.
ANSWER: C
PAGE:
Objective: AACSB Reflective
9.
8
TYPE: +
Skill Level: AICPA Legal
As a judge, Jay applies common law rules. These rules develop from
a.
b.
c.
d.
8.
9
8
TYPE: +
Skill Level: AICPA Legal
In a suit against Adam, Beth obtains a remedy, which is the means given to
a party
a.
b.
c.
d.
neither to recover a right nor to redress a wrong.
only to recover a right.
only to redress a wrong.
to recover a right or to redress a wrong.
ANSWER: D
PAGE:
Objective: AACSB Reflective
8
TYPE: =
Skill Level: AICPA Legal
10
10.
TEST BANK 1—UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS
Holly is a state court judge. Ilsa appears in a case in Holly’s court, claiming
that Jim breached a contract. As in most state courts, Holly may
a.
b.
c.
d.
award damages, cancel a contract, or direct a party to do or not to do
an act.
award damages only.
cancel a contract only.
direct a party to do or not to do a particular act only.
ANSWER: A
PAGE:
Objective: AACSB Reflective
11.
In a suit against Charles, Donna obtains the cancellation of a contractual
obligation, which is
a.
b.
c.
d.
a remedy at law.
rescission.
restitution.
specific performance.
ANSWER: B
PAGE:
Objective: AACSB Reflective
12.
9
TYPE: =
Skill Level: AICPA Legal
Net Corporation files a suit against Omega, Inc., alleging that Omega
breached a contract to sell Net a computer system for $100,000. Net is
a.
b.
c.
d.
the appellant.
the appellee.
the defendant.
the plaintiff.
ANSWER: D
PAGE:
Objective: AACSB Reflective
13.
9
TYPE: +
Skill Level: AICPA Legal
9
TYPE: N
Skill Level: AICPA Legal
In Abel v. Baker, a state supreme court held that a minor could cancel a
contract for the sale of a car. Now a trial court in the same state is deciding
Charles v. Delta, a case with similar facts. Under the doctrine of stare
decisis, the trial court is likely to
a.
b.
c.
allow the minor to cancel the contract.
disregard the previous case.
order the minor to cancel the contract.
CHAPTER 1: INTRODUCTION TO LAW AND LEGAL REASONING
d.
require the minor to fulfill the contract.
ANSWER: A
PAGE:
Objective: AACSB Reflective
10
TYPE: =
Skill Level: AICPA Critical
Thinking
11
12
14.
TEST BANK 1—UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS
In Export Co. v. Imports, Inc., there is no precedent on which the court can
base a decision. The court can consider, among other things,
a.
b.
c.
d.
neither public policy nor social values.
public policy only.
public policy or social values.
social values only.
ANSWER: C
PAGE:
Objective: AACSB Reflective
15.
Kurt is a judge hearing the case of Local Co. v. Macro Corp. Applying the
relevant rule of law to the facts of the case requires Kurt to find previously
decided cases that, in relation to the case under consideration, are
a.
b.
c.
d.
as different as possible.
as similar as possible.
at odds.
exactly identical.
ANSWER: B
PAGE:
Objective: AACSB Reflective
16.
10
TYPE: =
Skill Level: AICPA Critical
Thinking
A federal statute regulates an employment practice. To resolve a dispute
concerning the practice, Paula, a judge, will most likely apply
a.
b.
c.
d.
a common law doctrine that applied before the statute was enacted.
a common law doctrine that applies to other, different practices.
Paula’s personal philosophy of law.
the statute.
ANSWER: D
PAGE:
Objective: AACSB Reflective
17.
10
TYPE: +
Skill Level: AICPA Critical
Thinking
13
TYPE: =
Skill Level: AICPA Critical
Thinking
The term substantive law refers to laws that
a.
b.
c.
create legal rights and obligations.
establish the methods of enforcing rights.
focus on major, as opposed to minor, issues.
CHAPTER 1: INTRODUCTION TO LAW AND LEGAL REASONING
d.
prohibit substandard acts.
ANSWER: A
PAGE:
Objective: AACSB Reflective
14
TYPE: =
Skill Level: AICPA Legal
13
14
18.
TEST BANK 1—UNIT ONE: THE LEGAL ENVIRONMENT OF BUSINESS
Beth is a victim of Carl’s violation of a criminal law. Criminal law is concerned with
a.
b.
c.
d.
the prosecution of private individuals by other private individuals.
the prosecution of public officials by private individuals.
the relief available when a person’s rights are violated.
wrongs committed against the public as a whole.
ANSWER: D
PAGE:
Objective: AACSB Reflective
19.
The citation of a case does not include
a.
b.
c.
d.
the names of the parties.
the name(s) of the judge(s) who decided it.
the year in which it was decided.
the volume and page number of the applicable reporter where the
opinion may be found.
ANSWER: B
PAGE:
Objective: AACSB Analytic
20.
14
TYPE: N
Skill Level: AICPA Legal
17
TYPE: =
Skill Level: AICPA Research
The Pennsylvania Supreme Court decides the case of Quality Co. v. Royal
Corp. Of nine justices, five believe the judgment should be in Quality’s favor. Justice Smith, one of the five, writes a separate opinion. This opinion is
a.
b.
c.
d.
a concurring opinion.
a dissenting opinion.
a minority opinion.
a unanimous opinion.
ANSWER: A
PAGE:
Objective: AACSB Reflective
23
TYPE: +
Skill Level: AICPA Research
ESSAY QUESTIONS
1.
Americans with a Better Cause (ABC), a nonprofit organization, files a suit
against the U.S. Department of Justice (DOJ), claiming that a certain
federal statute the DOJ is empowered to enforce conflicts with the U.S.
Constitution and with a state constitution. In each situation, which source
of law has priority?
CHAPTER 1: INTRODUCTION TO LAW AND LEGAL REASONING
15
ANSWER: The U.S. Constitution is the supreme law of the land. A law in
violation of the Constitution, no matter what its source, will be declared
unconstitutional and will not be enforced. Thus, the federal statute does not
have priority over the Constitution. The federal statute would have priority
over the state constitution, however, because under the U.S. Constitution,
when there is a conflict between a federal law and a state law, the state law
is rendered invalid.
PAGE:
6
Objective: AACSB Reflective
2.
TYPE: =
Skill Level: AICPA Decision
Modeling
321 Studios, a seller of software for copying digital versatile discs (DVDs),
filed an action in the U.S. District Court of the Northern District of
California. 321 Studios sought a declaratory judgment from the court as to
whether 321 Studios’ product infringes on copyrights held by Metro
Goldwyn Mayer Studios, Inc., and other film studios. The court’s opinion in
the case is at 321 Studios v. Metro Goldwyn Mayer Studios, Inc. 307
F.Supp.2d 1085 (N.D.Ca. 2004). Specifically where can this opinion be
found?
ANSWER: This case—321 Studios v. Metro Goldwyn Mayer Studios, Inc.
307 F.Supp.2d 1085 (N.D.Ca. 2004)—can be found in its entirety in volume
307 of the Federal Supplement, Second Series, on page 1085. The U.S.
District Court for the Northern District of California decided this case in
2004.
PAGES:
17 & 19
Objective: AACSB Reflective
TYPE: +
Skill Level: AICPA Research