D216 WGU Business Law for
Accountants | 135
Comprehensive Study Guide
Questions
Foundations of the Legal System & Ethics
1. What is the primary source of law in the United States?
o ,, Resolution Result Verified Answers ,,,: The U.S. Constitution.
2. What is statutory law?
o ,, Resolution Result Verified Answers ,,,: Laws enacted by legislative
bodies at the federal, state, or local level (e.g., acts of Congress, state
statutes, city ordinances).
3. What is administrative law?
o ,, Resolution Result Verified Answers ,,,: The rules, orders, and
decisions of administrative agencies (e.g., the Securities and
Exchange Commission - SEC, the Internal Revenue Service - IRS).
4. What is common law?
o ,, Resolution Result Verified Answers ,,,: A body of law developed
from judicial decisions (court rulings and precedents), rather than
from statutes or constitutions.
5. What is the doctrine of stare decisis?
o ,, Resolution Result Verified Answers ,,,: A Latin phrase meaning "to
stand on decided cases." It is the principle that courts are obligated to
follow the precedents established in prior decisions within the same
jurisdiction.
, o ,,answer,,,:
6. What are the three branches of the U.S. government and their primary
legal function?
Legislative (creates statutes), Executive (enforces laws,
creates administrative law), and Judicial (interprets laws and reviews
their constitutionality).
7. What is the difference between criminal law and civil law?
o ,, Resolution Result Verified Answers ,,,: Criminal law deals with
wrongs against society as a whole, prosecuted by the government,
with penalties of fines or imprisonment. Civil law deals with rights
and duties between private parties, with remedies typically being
monetary damages or equitable relief.
8. What does the 14th Amendment provide?
o ,, Resolution Result Verified Answers ,,,: Passed in 1868 after the
Civil War, it provides, in part, that "[n]o State shall... deprive any
person of life, liberty, or property, without due process of law."
9. What is the Sarbanes-Oxley Act (SOX) of 2002 primarily concerned
with?
o ,, Resolution Result Verified Answers ,,,: Corporate accountability,
financial disclosure, and the prevention of accounting fraud. It
established the PCAOB and requires CEO/CFO certification of
financial statements.
10.What ethical theory focuses on the consequences of an action to
determine its morality?
o ,, Resolution Result Verified Answers ,,,: Utilitarianism (seeks the
greatest good for the greatest number).
11.What is the AICPA's overarching ethical principle for its members? o ,,
Resolution Result Verified Answers ,,,: To act in the public interest.
12.A business fails to disclose a significant liability in its financial
statements. Which legal principle could the company be violating?
, o ,,answer,,,:
o ,, Resolution Result Verified Answers ,,,: The Duty of Full
Disclosure.
13.During an audit, an accountant discovers a fraud scheme perpetrated
by a manager. What is the accountant's primary ethical obligation?
Report the fraud to the authorities. 14.
Which of the following is a primary goal of antitrust laws?
o ,, Resolution Result Verified Answers ,,,: Encourage competition.
15.A business is accused of false advertising. What law primarily governs
this issue?
o ,,
Resolution Result Verified Answers ,,,: The Consumer Protection
Act.
16.What is the primary purpose of the Sarbanes-Oxley Act?
o ,,
Resolution Result Verified Answers ,,,: Enhance corporate
governance.
17.What is the Bill of Rights?
o ,,Resolution Result Verified Answers ,,,: The first ten amendments
to the U.S. Constitution.
18.What is the difference between an action at law and an action in
equity?
o ,, Resolution Result Verified Answers ,,,: An action at law typically
seeks monetary damages and may involve a jury, while an action in
equity seeks non-monetary relief such as an injunction, specific
performance, or rescission and is decided by a judge.
19.What is the Commerce Clause?
o ,, Resolution Result Verified Answers ,,,: The provision in Article I,
Section 8, of the U.S. Constitution that gives Congress the power to
regulate interstate commerce.
20.What is the concept of "stare decisis"?
Accountants | 135
Comprehensive Study Guide
Questions
Foundations of the Legal System & Ethics
1. What is the primary source of law in the United States?
o ,, Resolution Result Verified Answers ,,,: The U.S. Constitution.
2. What is statutory law?
o ,, Resolution Result Verified Answers ,,,: Laws enacted by legislative
bodies at the federal, state, or local level (e.g., acts of Congress, state
statutes, city ordinances).
3. What is administrative law?
o ,, Resolution Result Verified Answers ,,,: The rules, orders, and
decisions of administrative agencies (e.g., the Securities and
Exchange Commission - SEC, the Internal Revenue Service - IRS).
4. What is common law?
o ,, Resolution Result Verified Answers ,,,: A body of law developed
from judicial decisions (court rulings and precedents), rather than
from statutes or constitutions.
5. What is the doctrine of stare decisis?
o ,, Resolution Result Verified Answers ,,,: A Latin phrase meaning "to
stand on decided cases." It is the principle that courts are obligated to
follow the precedents established in prior decisions within the same
jurisdiction.
, o ,,answer,,,:
6. What are the three branches of the U.S. government and their primary
legal function?
Legislative (creates statutes), Executive (enforces laws,
creates administrative law), and Judicial (interprets laws and reviews
their constitutionality).
7. What is the difference between criminal law and civil law?
o ,, Resolution Result Verified Answers ,,,: Criminal law deals with
wrongs against society as a whole, prosecuted by the government,
with penalties of fines or imprisonment. Civil law deals with rights
and duties between private parties, with remedies typically being
monetary damages or equitable relief.
8. What does the 14th Amendment provide?
o ,, Resolution Result Verified Answers ,,,: Passed in 1868 after the
Civil War, it provides, in part, that "[n]o State shall... deprive any
person of life, liberty, or property, without due process of law."
9. What is the Sarbanes-Oxley Act (SOX) of 2002 primarily concerned
with?
o ,, Resolution Result Verified Answers ,,,: Corporate accountability,
financial disclosure, and the prevention of accounting fraud. It
established the PCAOB and requires CEO/CFO certification of
financial statements.
10.What ethical theory focuses on the consequences of an action to
determine its morality?
o ,, Resolution Result Verified Answers ,,,: Utilitarianism (seeks the
greatest good for the greatest number).
11.What is the AICPA's overarching ethical principle for its members? o ,,
Resolution Result Verified Answers ,,,: To act in the public interest.
12.A business fails to disclose a significant liability in its financial
statements. Which legal principle could the company be violating?
, o ,,answer,,,:
o ,, Resolution Result Verified Answers ,,,: The Duty of Full
Disclosure.
13.During an audit, an accountant discovers a fraud scheme perpetrated
by a manager. What is the accountant's primary ethical obligation?
Report the fraud to the authorities. 14.
Which of the following is a primary goal of antitrust laws?
o ,, Resolution Result Verified Answers ,,,: Encourage competition.
15.A business is accused of false advertising. What law primarily governs
this issue?
o ,,
Resolution Result Verified Answers ,,,: The Consumer Protection
Act.
16.What is the primary purpose of the Sarbanes-Oxley Act?
o ,,
Resolution Result Verified Answers ,,,: Enhance corporate
governance.
17.What is the Bill of Rights?
o ,,Resolution Result Verified Answers ,,,: The first ten amendments
to the U.S. Constitution.
18.What is the difference between an action at law and an action in
equity?
o ,, Resolution Result Verified Answers ,,,: An action at law typically
seeks monetary damages and may involve a jury, while an action in
equity seeks non-monetary relief such as an injunction, specific
performance, or rescission and is decided by a judge.
19.What is the Commerce Clause?
o ,, Resolution Result Verified Answers ,,,: The provision in Article I,
Section 8, of the U.S. Constitution that gives Congress the power to
regulate interstate commerce.
20.What is the concept of "stare decisis"?
