ACE 06 Legal & Business Flashcards
Which of the following is NOT one of the potential benefits of a sole proprietorship?
A corporate veil shields the owner from losses
Why?
In a sole proprietorship, financial losses and liabilities are the sole responsibility of the owner. There is no corporate veil that shields the actions of the business from the personal responsibility of the owner, even if the owner conducts business under a different company name.
When working in a general partnership with a family member, it is a good idea to operate the business as a 50-50 partnership so that both partners have an equal say in how the business is run.
FALSE
Why?
Most attorneys will advise against operating a business as a 50-50 partnership, even if it involves owners from the same family. A 50-50 partnership can result in a stalemate, because neither partner can institute policy without the permission of the other, since business decisions must be approved by a majority (50.1%) of the owners.
A company experiences a yearly loss and one of the partners uses that loss to offset profits from another business. This is an example of __________.
Flow-through taxation
Why?
In sole proprietorships and partnerships, profits are taxed at lower personal rates rather than higher corporate rates. In addition, yearly losses can flow-through to be used by the owner to offset profits from other income.
ACE Personal Trainer Manual, 5th edition, p. 642
Which type of corporation is most typically used by personal-training businesses?
Subchapter S-corporations
Why?
Subchapter S-corporations, or S-corps, are the most “typical” type of corporation used by personal-training businesses that do not operate as sole proprietorships or partnerships.
ACE Personal Trainer Manual, 5th edition, p. 643
Which of the following business structures has double taxation as one of its primary disadvantages?
C-corporation
Why?
C-corporations, or C-corps, are taxed as a company first and then any profits that are remaining may be provided to shareholders. Since the shareholders must then pay taxes on their dividends, C-corps are said to provide double taxation.
ACE Personal Trainer Manual, 5th edition, p. 644
Which of the following standards has been used when a plaintiff is prevented from receiving remuneration following an injury due to the fact that he was found to have played a minor role in his own injury?
Your Choice was:
Contributory negligence
Why?
In certain states, contributory negligence laws prevent a plaintiff in a lawsuit who has played some role in the injury from receiving any remuneration. For example, if a client failed to notify a trainer that the soles of one of his shoes had been slipping, he would be partially to blame if his foot slipped while conducting a squat lift, even if the trainer did not properly spot the client. The client’s improper actions bar him from recovering any money, even though the trainer was partially at fault.
Which of the following activities falls outside a personal trainer’s scope of practice?
Providing progressive exercise prescriptions
Why?
Many states allow exercise “prescriptions” to be developed only by a licensed doctor. Therefore, it is important that trainers provide exercise programs, not exercise prescriptions. Although the difference between these terms may sound like a technicality, it could become an important issue in a courtroom.
ACE Personal Trainer Manual, 5th edition, p. 661
An umbrella liability policy provides added coverage for all of the other insurance that a person may have in place.
TRUE
Why?
The umbrella policy provides added coverage for all of the other insurance (e.g., auto, home, professional liability) that a person may have in place.
ACE Personal Trainer Manual, 5th edition, p. 665
When training in a client’s home, a personal trainer must use recordings produced specifically for use in fitness facilities or risk being in violation of copyright law.
FALSE
Why?
When training clients in their homes, personal trainers can have clients provide the music for each session. In effect, the clients are then using these recording for their own private, non-commercial enjoyment during exercise.
ACE Personal Trainer Manual, 5th edition, p. 667
When evaluating the risk of injury associated with a particular activity, a personal trainer finds that the frequency of occurrence is low or seldom, and the severity of injury is categorized as high or vital. What is the BEST course of action?
Transfer
Why?
The best course of action in this situation is to transfer the risk, which involves moving the risk to others through waivers, insurance policies, etc.
ACE Personal Trainer Manual, 5th ed., p. 669
Which of the following is a DISADVANTAGE of working as a direct employee?
The personal trainer likely has to work an established minimum number of hours.
Why?
The personal trainer likely has to work an established minimum number of hours.
Many employers have requirements for the minimum number of hours that a direct employee must work and will terminate an employee if he or she fails to meet these requirements.
ACE Personal Trainer Manual, 5th edition, p. 675
Which of the following is an ADVANTAGE of working as an independent contractor?
The facility allows the trainer to establish all training fees.
Why?
The facility allows the trainer to establish all training fees.
The independent-contractor model allows the trainer to make a decision about how much money to charge for his or her services. The other three choices are advantages of working as a direct employee.
ACE Personal Trainer Manual, 5th edition, p. 677
In which section of a business plan should a personal trainer identify the operating model and how it is different or unique when compared to other training studios in the area?
Business description
Why?
The business description should accomplish the following:
Identify the operating model and how it is different or unique when compared to other training studios in the area
Describe the fitness industry specific to the local market
Provide details such as the number and location of competitors, how many employees they have, and the number of clients to whom they provide services
List the members of the management team, highlighting their knowledge, skills, and experience
ACE Personal Trainer Manual, 5th edition, p. 679
Which of the following is NOT one of the key components of the marketing plan portion of the business plan?
The barriers of entry into the business
Why?
The discussion of the barriers to entry, including the costs associated with starting a business, such as rental fees, equipment, employees, and marketing, are included in the risk analysis section of the business plan.
ACE Personal Trainer Manual, 5th edition, p. 680
Small-group personal training provides financial benefits to both the trainer and client.
TRUE
Why?
Personal trainers who offer small-group training services increase their hourly earning power while giving each client a reduced cost of training. For example, a trainer who typically charges $60 per session can reduce the cost to $45 for each client, thereby increasing his or her hourly income to $90 for two participants.
What is the BEST response if a prospective client is unable to adjust his or her schedule to fit into the time that the personal trainer has available?
The trainer should refer this client to another trainer working in the facility.
Why?
If a prospective client is not able to adjust his or her schedule to fit into the time that a trainer has available, that client should be referred to another trainer who has availability at that time. Developing these relationships and the confidence to refer business away to other trainers will help a trainer establish a professional image.
ACE Personal Trainer Manual, 5th edition, p. 698
Most buying decisions, particularly when it comes to service businesses like personal training, are financially driven.
FALSE
Why?
Buying decisions are emotionally driven, meaning that prospective clients will think with logic, but act on emotion.
ACE Personal Trainer Manual, 5th edition, p. 701
Having friends or family members pay you directly for personal-training services instead of processing those fees through the fitness facility is a good way to supplement your income.
FALSE
Why?
This practice, which is known as “training under the table,” is illegal, unethical, and in violation of the ACE Code of Ethics.
ACE Personal Trainer Manual, 5th edition, p. 677
What is hypoglycemia?
Hypoglycemia is a condition caused by a very low level of blood sugar (glucose), your body’s main energy source.
Hypoglycemia is often related to the treatment of diabetes.
If blood sugar levels become too low, signs and symptoms may include:
An irregular heart rhythm Fatigue Pale skin Shakiness Anxiety Sweating Hunger Irritability Tingling sensation around the mouth Crying out during sleep
Immediate treatment of hypoglycemia is necessary when blood sugar levels are at 70 milligrams per deciliter (mg/dL) or 3.9 millimoles per liter (mmol/L) or below. Treatment involves quick steps to get your blood sugar level back into a normal range either with high-sugar foods or drinks or with medications.
What’s dyspnea?
Difficult and labored breathing can be common occurrence, such as when an unconditioned person attempts to exercise vigorously.
Do no lie down a person. Lying down may increase the difficult of breathing.
