D216 Business Law for Accountants - Set 1 - Part 1

Correct Answer: Statutory law

A city council is a local legislative body, and a measure it enacts is a local ordinance, which is a form of statutory law. Statutory law is any rule passed by elected lawmakers. Option a is incorrect because case law comes from a judge deciding a dispute and writing an opinion. No court resolved anything here; an elected council simply voted a requirement into effect, which is legislative rather than judicial. Option b is incorrect because administrative law flows from an agency the legislature created to handle technical detail work. A city council is the legislature itself passing a rule directly, not an appointed agency issuing regulations under a grant. Option d is incorrect because common law is the old judge-made tradition that governs only where no statute exists. This posting rule was deliberately written and enacted by lawmakers, so an enacted statute controls and displaces any common law.

Correct Answer: Specific performance

Specific performance is an equitable remedy that orders a party to actually perform what was promised. Courts grant it where the subject matter is unique and money cannot substitute, which fits a one-of-a-kind locomotive. Option b is incorrect because money damages are a remedy at law meant to compensate a loss with cash. Northwind wants the unique item itself, and no dollar award could buy a locomotive that simply does not exist elsewhere. Option c is incorrect because per curiam merely describes an unsigned appellate opinion issued by the court as a whole. It labels authorship in a decision, not a remedy a trial court awards to enforce a broken sales contract. Option d is incorrect because rescission cancels the deal and returns both sides to where they started. That would release the collector from delivering, the opposite of what Northwind seeks, since Northwind actually wants the locomotive handed over.

Correct Answer: One act can be crime and wrong

A single act can be both a crime against society and a civil wrong against a victim. The government prosecutes to punish, while the company sues to be compensated, so both proceed as separate cases under different burdens. Option a is incorrect because the civil suit does not depend on a criminal conviction. The two proceedings are independent, run under different standards of proof, and either may move forward without waiting on the outcome of the other. Option b is incorrect because both cases can go forward at once. Criminal law punishes the wrong to society while civil law compensates the victim, and nothing about a prosecution blocks the injured company from pursuing its own recovery. Option c is incorrect because double jeopardy only prevents a second criminal prosecution for the same offense. It does not touch civil litigation at all, so the company remains free to sue Dana even after the government charges her criminally.

Correct Answer: The appellant

The appellant is the party who lost at trial and now appeals the outcome. You appeal only a result that went against you, so Rivera, having lost below, becomes the appellant seeking reversal on appeal. Option a is incorrect because respondent is a trial-level label for the party being sued, equivalent to defendant. At the appeal stage the terms shift to appellant and appellee, and Rivera is the one bringing the appeal after losing. Option c is incorrect because plaintiff describes only Rivera's trial-level role as the one who filed suit. It says nothing about her posture on appeal, and either an original plaintiff or defendant can lose below and become the appellant. Option d is incorrect because the appellee is the party who won at trial and now defends the judgment on appeal. Here that describes Rivera's opponent, not Rivera, since Rivera lost below and is now appealing.

Correct Answer: The agency exceeded its granted authority

An agency is the agent of the legislature, its principal, and may act only within the authority granted by its enabling statute. Wage-setting falls outside a machinery-safety mandate, so the rule exceeds the agency's delegated power. Option b is incorrect because the Commerce Clause concerns whether Congress may reach interstate activity, a question about legislative power itself. The flaw here is that the agency wandered beyond the specific topic its own enabling statute assigned it. Option c is incorrect because agencies certainly can regulate wages when a legislature grants them that authority. The defect here is specific to this agency's narrow safety mandate, not a blanket ban on any agency ever addressing wage questions. Option d is incorrect because Congress routinely delegates factory regulation to agencies through enabling statutes. The problem is not that an agency acted, but that this agency addressed wages when it was empowered only to set machinery-safety standards.

Correct Answer: The moral minimum

The moral minimum is the lowest ethical level society tolerates, usually defined as bare compliance with the law. Treating legal obedience as the whole of a firm's duty describes exactly that floor-level standard the colleague criticizes. Option a is incorrect because the triple bottom line measures a firm across people, planet, and profits together. It is a broad performance yardstick that goes well beyond legal compliance, not a description of bare legal obedience. Option b is incorrect because corporate social responsibility holds that firms should act ethically and answer to all stakeholders. That view asks far more than legal compliance, so it contradicts the executive's minimalist stance rather than naming it. Option d is incorrect because rights-based theory judges an action by whether it respects others' fundamental rights. The executive weighs nobody's rights; the executive simply equates ethics with obeying whatever the law happens to require of the firm.

Correct Answer: Intermediate scrutiny review

Classifications based on gender receive intermediate scrutiny under the Equal Protection Clause. The government must show the law is substantially related to an important objective, a middle standard tougher than rational basis but easier than strict scrutiny. Option a is incorrect because rational basis is the lenient default reserved for economic and social-welfare regulation. A gender classification is treated as more suspicious than ordinary business rules, so courts apply a heightened standard rather than this easy test. Option b is incorrect because preponderance of the evidence is a civil burden of proof, describing how convincingly a party must prove facts. It is not a tier of equal-protection review and cannot decide whether this licensing classification is valid. Option c is incorrect because strict scrutiny is reserved for suspect classes like race and for fundamental rights. Gender draws the intermediate tier instead, so a court would not demand that this licensing law be necessary to a compelling interest.

Correct Answer: The majority opinion

A majority opinion represents more than half of the judges and sets binding precedent. Five of seven is more than half agreeing on both result and reasoning, so their opinion controls and guides later cases in that jurisdiction. Option a is incorrect because a plurality is the largest bloc that still falls short of more than half. Five of seven is a clear majority, so it carries full precedential weight rather than a plurality's weaker force. Option c is incorrect because a dissent is written by judges who disagree with the outcome. That describes the two judges on the losing side here, not the five who agreed on the result and whose opinion becomes binding law. Option d is incorrect because a concurrence agrees with the result but rests on different reasoning than the main opinion. The five judges shared the same reasoning, so their controlling opinion is a majority, not a separate concurrence.

Correct Answer: An independent regulatory agency

An independent regulatory agency is deliberately insulated from the President: its officers serve fixed terms and can be removed only for just cause. That design keeps functions like broadcasting regulation stable and shielded from routine political control. Option a is incorrect because an executive agency's officers can be appointed and removed by the President more freely, giving greater presidential control. Fixed terms and just-cause removal point away from that model toward a more insulated structure. Option b is incorrect because police-power bodies are state entities protecting health, safety, and welfare under reserved authority. The scenario describes a federal agency with presidentially appointed commissioners, a creature of federal law, not state police power. Option d is incorrect because a common-law tribunal is not an agency type at all. The described body is a modern regulatory agency created by statute, whereas common law refers to old judge-made doctrine built from custom and precedent.

Correct Answer: A constitutional holding needs an amendment

A constitutional ruling of the Supreme Court cannot be undone by ordinary legislation, because a statute conflicting with the Constitution is void. Changing such a holding requires amending the Constitution under Article Five, or the Court overruling itself. Option b is incorrect because a presidential veto applies to bills passed by Congress, not to judicial decisions. The President cannot veto a court ruling, and vetoing legislation would do nothing to disturb the Court's constitutional holding here. Option c is incorrect because state legislatures cannot override a federal constitutional decision. They may propose amendments as part of the Article Five process, but no single state legislature can, by itself, reverse a ruling of the Supreme Court. Option d is incorrect because agencies have no power to overturn any court, let alone the Supreme Court. Agencies issue regulations within authority delegated by Congress; they cannot reverse a constitutional interpretation announced by the nation's highest court.

Correct Answer: The Uniform Commercial Code

The Uniform Commercial Code governs commercial transactions such as the sale of goods and has been adopted by all fifty states. When a scenario turns on a sale of goods between merchants, the UCC is the source in play. Option a is incorrect because constitutional law establishes and limits government power rather than resolving private sales disputes. A disagreement about whether shipped goods conformed to a contract is governed by commercial law, not by the federal Constitution. Option b is incorrect because criminal statutory law defines and punishes offenses against society. A conforming-goods dispute between two businesses is a private civil matter over a contract, so no criminal statute supplies the governing rule here. Option c is incorrect because Full Faith and Credit requires states to honor one another's judgments and records. It manages relations between states, not the substantive rules for whether delivered goods matched what a sales contract required.

Correct Answer: The Fourth Amendment

The Fourth Amendment protects against unreasonable searches and seizures, and it reaches business premises. Generally the government needs a warrant issued on probable cause shown to a judge before searching, which the investigator here skipped. Option a is incorrect because the Establishment Clause forbids the government from setting up or favoring an official religion. It has nothing to do with warehouse searches, so it offers no shield against an investigator entering to look for records. Option b is incorrect because the privilege against self-incrimination protects a person from being forced to testify against themselves. It does not govern physical searches of premises, and a corporation cannot even claim that privilege in the first place. Option d is incorrect because Free Exercise protects the freedom to hold and practice religious beliefs. A dispute about searching a warehouse for records raises no religious-liberty question, so this clause supplies no basis to resist the search.

Correct Answer: Self-incrimination protects only natural persons

The Fifth Amendment privilege against self-incrimination applies only to natural persons, not to corporations or partnerships. A business entity cannot plead the Fifth, because the privilege is personal to human beings and does not extend to artificial entities. Option b is incorrect because the privilege does not turn on how large or small a company is. No corporation, whether tiny or enormous, can plead the Fifth, since the protection belongs only to natural persons. Option c is incorrect because due process does not forbid a corporation from testifying; it guarantees fair procedures and applies to corporations. The reason Acme cannot plead the Fifth is the self-incrimination rule, not any bar arising from due process. Option d is incorrect because corporations can never invoke the self-incrimination privilege. The protection is reserved for human beings, so claiming that a corporation may always plead the Fifth states the rule exactly backward.

Correct Answer: The present case should be distinguished

Distinguishing a case argues that the present facts differ from the precedent in a legally significant way, so the old rule does not apply. A deliberately placed display differs from an unnoticed spill, letting the lawyer avoid the precedent. Option a is incorrect because overruling asks the court to declare the prior decision wrong and replace it, a dramatic step usually reserved for higher courts. The lawyer need only show her facts differ from the precedent. Option b is incorrect because stare decisis remains firmly in force; courts still follow binding precedent within their jurisdiction. The lawyer cannot pretend the doctrine vanished, so she must instead show that this precedent does not fit her facts. Option c is incorrect because a controlling precedent from a higher court in the same jurisdiction is binding, not merely persuasive. Labeling it persuasive would misstate its authority, so her viable move is to distinguish the differing facts.

Correct Answer: The triple bottom line

The triple bottom line judges a firm on three dimensions: people, planet, and profits. Measuring impact on employees, community, and the environment alongside financial results is precisely this broader standard rather than profit alone. Option a is incorrect because the moral minimum refers to bare compliance with the law as the lowest tolerated ethical level. It is a single floor concept, not a three-part measure of a firm's social, environmental, and financial performance. Option c is incorrect because rational basis review is a lenient equal-protection standard courts use for economic regulation. It concerns judging the validity of laws, not a company's internal method for gauging its performance across several dimensions. Option d is incorrect because the profit-maximizer view holds that a firm's only real duty is to boost shareholder profit. That is the opposite of a three-part measure, which widens the lens beyond profit to people and planet.

Correct Answer: The Supremacy Clause

The Supremacy Clause makes valid federal law the supreme law of the land, so conflicting state law is invalid. When a state statute directly clashes with a constitutional federal statute, the federal rule controls and the manufacturer follows it. Option a is incorrect because Privileges and Immunities bars a state from discriminating against citizens of other states. The scenario is a direct federal-versus-state conflict over labeling, not a state treating out-of-state residents worse than its own. Option b is incorrect because police powers describe the states' broad authority over health, safety, and welfare. That authority does not let a state override a valid conflicting federal statute; when the two collide, federal law prevails instead. Option d is incorrect because the Taxing and Spending Power concerns Congress raising revenue and paying the nation's debts. It has no bearing on which of two conflicting labeling statutes wins, a question answered by federal supremacy.

Correct Answer: Duty-based deontological ethics

Duty-based, or deontological, ethics judges the act itself by the duties and rights involved, regardless of results. Grounding the refusal in a duty of honesty and the customer's right to truth, independent of outcomes, is classic duty-based reasoning. Option b is incorrect because consequentialism weighs costs and benefits to pick the option with the best overall results. The manager rejected that calculus, insisting honesty is required no matter the payoff, which points to duty. Option c is incorrect because the triple bottom line measures a firm's performance across people, planet, and profits. It is not a mode of ethical reasoning about a single act, so it cannot explain the manager's refusal. Option d is incorrect because outcome-based ethics judges a choice by its consequences and seeks the greatest good for the greatest number. The manager deliberately set results aside, resting the decision on duty and rights rather than on outcomes.

Correct Answer: The lightning-bolt symbol is the trademark

A trademark is a source identifier, the mark that points to who made a product, not the product itself. The stylized lightning bolt identifies the maker, so it is the trademark, while the sneaker is merely the goods being identified. Option a is incorrect because the mark and the product play different roles: the symbol identifies, and the shoe is identified. Only the identifying symbol functions as the trademark, so treating both equally confuses the mark with the goods. Option b is incorrect because the sneaker is the product, not the identifier. A trademark protects only the brand element that signals origin, so the shoe cannot be the trademark, even though it carries the mark that identifies its source. Option c is incorrect because sneakers absolutely can carry a protectable brand. The distinctive lightning-bolt symbol identifies the source and functions as a trademark, so it is simply wrong to say footwear cannot be branded at all.

Correct Answer: The rival who filed first obtains it

Under the America Invents Act, the United States uses a first-to-file system, so the first person to file an application gets the patent, not necessarily the first to invent. The rival who reached the patent office first therefore prevails. Option a is incorrect because the country abandoned the first-to-invent rule under the America Invents Act. Being the true first inventor no longer secures the patent; priority now turns on who files the application first. Option b is incorrect because independent invention by two people does not cancel patent rights. The system still awards the patent to one of them, determined by filing date, so the earlier filer wins rather than neither obtaining any protection. Option d is incorrect because first-to-file awards the patent to a single filer, not to competing inventors jointly. The law breaks the tie by filing date instead of forcing shared ownership, so the earliest filer takes it.

Correct Answer: A patent on the invention

Patents are the only intellectual-property type that must be registered to exist; you must apply for and be granted a patent or you have no patent rights. The other three types are protected without any mandatory registration. Option a is incorrect because a trademark arises from being the first to use a distinctive mark in commerce. Registration is available but optional, so a brand name can be a protected trademark without ever applying for a formal grant. Option c is incorrect because copyright protection attaches automatically the moment an original work is fixed in a durable medium. A manual is protected on fixation with no filing required, so it is not the type that must be registered. Option d is incorrect because a trade secret has no registration at all; filing anything would destroy the secrecy that protects it. The assembly process is guarded simply by being kept confidential, not by obtaining any government grant.