LESSON 23 - LEGAL RESPONSIBILITIES AND BUSINESS STRATEGIES QUIZ Flashcards
Which of the following is NOT one of the potential benefits of a sole proprietorship?
Choose One
A corporate veil shields the owner from losses
There is minimal ongoing paperwork
All profits belong to the owner
The owner makes all final decisions
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.
ACE Personal Trainer Manual, 5th edition, p. 640
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.
Choose One
FALSE
TRUE
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.
ACE Personal Trainer Manual, 5th edition, p. 641
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 __________.
Choose One
Flow-through taxation
Double taxation
The corporate veil
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 of the following business structures has double taxation as one of its primary disadvantages?
Choose One
General partnership
C-corporation
Franchise operation
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 activities falls outside a personal trainer’s scope of practice?
Choose One
Recognizing a client’s physical or psychological problems that might interfere with safe and effective exercise
Administering appropriate fitness assessments
Providing progressive exercise prescriptions
Using a health-history form to screen a client for appropriate placement and/or referral
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.
Choose One
TRUE
FALSE
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.
Choose One
FALSE
TRUE
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?
Choose One
Transfer
Retain
Reduce
Avoid
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
A trainer receives a bonus for meeting performance objectives on a quarterly basis. Is this personal trainer more likely a direct employee or an independent contractor?
Choose One
Direct employee
Independent contractor
Direct employee
Why?
In addition to the pay rates for hourly work and training sessions, many companies will reward direct-employee trainers with bonuses if they meet certain performance objectives.
ACE Personal Trainer Manual, 5th edition, p. 673
Which of the following is an ADVANTAGE of working as an independent contractor?
Choose One
The facility provides health insurance and other benefits.
The facility provides opportunities for promotion.
The facility covers the cost of marketing for new facility members.
The facility allows the trainer to establish all training fees.
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?
Choose One
Business description
Operational plan
Marketing plan
Executive summary
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?
Choose One
Plan for communicating the benefits of personal training
The barriers of entry into the business
Demand for personal-training services
Specific type or brand of training being offered
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.
Choose One
FALSE
TRUE
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.
ACE Personal Trainer Manual, 5th edition, p. 689
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?
Choose One
The trainer should let the client know that he or she will be unable to provide training.
The trainer should write up an exercise program that the client can perform on his or her own
The trainer should refer this client to another trainer working in the facility.
The trainer should adjust his or her schedule to accommodate the client.
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.
Choose One
TRUE
FALSE
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
