Section A - Understanding the Legal and Tax Environment

Question 1

Questions

Answer 1

Answers

Question 2

The governments or controlling authorities create and enforce rules in society called ___________.

Answer 2

laws

Question 3

This unwritten body of law, __________ law, has evolved out of judicial (court) decisions rather than being enacted by legislature.

Answer 3

common law

Question 4

This written law, __________ law, is enacted by legislature at all levels of the government from city and state to federal.

Answer 4

statutory law

Question 5

The rules, regulations, and orders passed by boards, commissions, and agencies of federal, state, and local governments, known as __________ law, are related to statutory law.

Answer 5

administrative law

Question 6

The body of law that governs commercial dealings is ___________ law.

Answer 6

business law

Question 7

The ___________________ sets forth the rules that apply to commercial transactions between businesses and between individuals and businesses. It simplifies the process of doing business across state lines by standardizing laws that cover the sale of goods, bank deposits and collections, letters of credit, documents of title, and investment securities.

Answer 7

Uniform Commercial Code (UCC)

Question 8

The ____________ branch of government is responsible for settling disputes by applying and interpreting points of law.

Answer 8

judiciary

Question 9

Most court cases start in the trial courts, also called courts of general jurisdiction, which hear cases involving serious federal crimes, immigration, postal regulations, disputes between citizens of different states, patents, copyrights, and bankruptcy.

Answer 9

trial courts

Question 10

The losing party in a civil (noncriminal) case and a losing defendant in a criminal case may appeal the trial court’s decision to the next level in the judicial system, the ________.

Answer 10

appellate courts (courts of appeals)

Question 11

An alternative to settling disputes in court is ___________ where the parties agree to present their case to an impartial third party and are required to accept the decision.

Answer 11

arbitration

Question 12

Similar to arbitration is __________ where the parties are helped to negotiate a settlement and may suggest alternative solutions, but the parties are not required to accept the decision.

Answer 12

Mediation

Question 13

An agreement that setting forth the relationship between parties regarding the performance of a specified action is called a ________ which creates a legal obligation and is enforceable in a court of law (legally binding).

Answer 13

contract

Question 14

A ____________ occurs when one party to a contract fails (without legal excuse) to fulfill the terms of the agreement giving the other party the right to seek a remedy in court.

Answer 14

breach of contract

Question 15

A(n) ___________________ gives an inventor the exclusive right to manufacture, use, and sell an invention for 20 years. It applies to a new, unique, and useful physical process, machine, or formula and is considered intangible personal property.

Answer 15

patent

Question 16

Exclusive right, shown by the symbol ©, given to a writer, artist, composer, or playwright to use, produce, and sell her or his creation is a _____________. Works protected by this include printed materials (books, magazine articles, lectures), works of art, photographs, and movies. For the life of the creator plus 70 years after creator’s death. It is considered intellectual property and intangible personal property.

Answer 16

copyright

Question 17

A ____________ is a design, name, or other distinctive mark that a manufacturer uses to identify its goods in the marketplace.

Answer 17

trademark

Question 18

A ____________ is a symbol, name, or design that identifies a service rather than a tangible object.

Answer 18

servicemark

Question 19

A _________ is a civil, or private, act that harms other people or their property. It is part of common law and not a result of a breach of contract. The harm may involve physical injury, emotional distress, invasion of privacy, or defamation (injuring a person’s character by publication of false statements). The injured party may sue the wrongdoer to recover damages for the harm or loss.

Answer 19

tort

Question 20

The manufacturers’ and sellers’ responsibility for defects in the products they make and sell is referred to as __________________.

Answer 20

product liability

Question 21

Under the concept of product-liability law, ___________ holds a manufacturer or seller liable for any personal injury or property damage caused by defective products or packaging — even if all possible care was used to prevent such defects.

Answer 21

strict liability

Question 22

The legal procedure by which individuals or businesses that cannot meet their financial obligations are relieved of their debts, is called ________________.

Answer 22

bankruptcy

Question 23

Laws that prevent companies from entering into agreements to control trade through a monopoly are called ________________.

Answer 23

antitrust regulation

Question 24

The social movement ______________ reflects the struggle for power between buyers and sellers and seeks to increase the rights and powers of consumers over sellers.

Answer 24

consumerism

Question 25

The removal of rules and regulations governing business competition is called ______________.

Answer 25

deregulation

Question 26

Taxes based on the income received by businesses and individuals are _____________ taxes.

Answer 26

income taxes

Question 27

Taxes assessed on real and personal property, based on the assessed value of the property are ________ taxes.

Answer 27

property taxes

Question 28

The taxes employers pay on wages, salaries, and commissions that include the employer’s share of Social Security taxes and federal and state unemployment taxes are ____________ taxes.

Answer 28

payroll taxes

Question 29

The taxes imposed by states, counties, and cities levied on goods when they are sold at a percentage of the sales price are ___________ taxes.

Answer 29

sales taxes

Question 30

The taxes assessed by federal, state, and local governments placed on specific items, such as gasoline, alcoholic beverages, cigarettes, airline tickets, cars, and guns, to help pay for services related to the item taxed are called _________ taxes.

Answer 30

excise taxes