BUSINESS AND LAW EXAM LEVEL 2 LATEST 2026
VERSION WITH 100 QUESTIONS AND CORRECT
DETAILED ANSWERS (VERIFIED ANSWERS)
|ALREADY GRADED A+||BRAND NEW VERSION!!
1. Which of the following best defines a sole proprietorship?
A. A business owned by two or more individuals
B. A business legally separate from its owners
C. A business owned and operated by one person
D. A government-owned business
C. A business owned and operated by one person – A sole proprietorship is
owned by a single individual who assumes all liability and receives all
profits.
2. What is the primary purpose of a contract in business?
A. To create a legally enforceable obligation
B. To increase sales revenue
C. To reduce competition
D. To establish company hierarchy
A. To create a legally enforceable obligation – Contracts formalize
agreements and ensure parties fulfill their obligations under the law.
3. Which of the following is an example of a tort?
A. Breach of contract
B. Negligence causing injury
C. Failure to file taxes
D. Trademark infringement
B. Negligence causing injury – A tort is a civil wrong, such as negligence,
that causes harm to another person or their property.
4. What does “limited liability” mean in a corporation?
A. Shareholders are not responsible for company debts beyond their
, investment
B. The company has limited revenue
C. Employees cannot sue the company
D. The government provides financial support
A. Shareholders are not responsible for company debts beyond their
investment – Limited liability protects owners from personal financial loss
beyond what they invested in the corporation.
5. Which law governs the sale of goods in most U.S. states?
A. Employment Law
B. Uniform Commercial Code (UCC)
C. Criminal Law
D. Bankruptcy Law
B. Uniform Commercial Code (UCC) – The UCC standardizes commercial
transactions, including sales of goods, across states.
6. Which of the following is a key characteristic of a partnership?
A. Profits and losses are shared among partners
B. Owners have no personal liability
C. Only one owner exists
D. It is a government entity
A. Profits and losses are shared among partners – Partnerships involve
shared ownership, responsibilities, and distribution of profits and losses.
7. What type of intellectual property protects inventions?
A. Copyright
B. Trademark
C. Patent
D. Trade secret
C. Patent – Patents grant inventors exclusive rights to their inventions for a
limited time.
8. In business law, what is “consideration” in a contract?
A. The legal terms of the contract
B. Something of value exchanged between parties
, C. A verbal agreement only
D. A company policy
B. Something of value exchanged between parties – Consideration is the
benefit or detriment exchanged that makes a contract legally binding.
9. Which of the following best describes fiduciary duty?
A. Obligation to maximize profit at all costs
B. Legal responsibility to act in another’s best interest
C. Right to terminate contracts without notice
D. Requirement to pay taxes promptly
B. Legal responsibility to act in another’s best interest – Fiduciary duty is
the duty of loyalty and care owed by one party to another, often in business
or financial relationships.
10.A “business license” is required to:
A. Hire employees
B. Operate legally within a jurisdiction
C. Increase profits
D. Draft contracts
B. Operate legally within a jurisdiction – Licensing ensures businesses
comply with local regulations and standards.
11.Which of the following is considered a fixed cost?
A. Raw materials
B. Rent
C. Sales commission
D. Packaging
B. Rent – Fixed costs remain constant regardless of the business’s level of
production or sales.
12.What is the main purpose of antitrust laws?
A. To protect trade secrets
B. To prevent monopolies and promote competition
C. To enforce tax regulations
D. To regulate employee benefits
VERSION WITH 100 QUESTIONS AND CORRECT
DETAILED ANSWERS (VERIFIED ANSWERS)
|ALREADY GRADED A+||BRAND NEW VERSION!!
1. Which of the following best defines a sole proprietorship?
A. A business owned by two or more individuals
B. A business legally separate from its owners
C. A business owned and operated by one person
D. A government-owned business
C. A business owned and operated by one person – A sole proprietorship is
owned by a single individual who assumes all liability and receives all
profits.
2. What is the primary purpose of a contract in business?
A. To create a legally enforceable obligation
B. To increase sales revenue
C. To reduce competition
D. To establish company hierarchy
A. To create a legally enforceable obligation – Contracts formalize
agreements and ensure parties fulfill their obligations under the law.
3. Which of the following is an example of a tort?
A. Breach of contract
B. Negligence causing injury
C. Failure to file taxes
D. Trademark infringement
B. Negligence causing injury – A tort is a civil wrong, such as negligence,
that causes harm to another person or their property.
4. What does “limited liability” mean in a corporation?
A. Shareholders are not responsible for company debts beyond their
, investment
B. The company has limited revenue
C. Employees cannot sue the company
D. The government provides financial support
A. Shareholders are not responsible for company debts beyond their
investment – Limited liability protects owners from personal financial loss
beyond what they invested in the corporation.
5. Which law governs the sale of goods in most U.S. states?
A. Employment Law
B. Uniform Commercial Code (UCC)
C. Criminal Law
D. Bankruptcy Law
B. Uniform Commercial Code (UCC) – The UCC standardizes commercial
transactions, including sales of goods, across states.
6. Which of the following is a key characteristic of a partnership?
A. Profits and losses are shared among partners
B. Owners have no personal liability
C. Only one owner exists
D. It is a government entity
A. Profits and losses are shared among partners – Partnerships involve
shared ownership, responsibilities, and distribution of profits and losses.
7. What type of intellectual property protects inventions?
A. Copyright
B. Trademark
C. Patent
D. Trade secret
C. Patent – Patents grant inventors exclusive rights to their inventions for a
limited time.
8. In business law, what is “consideration” in a contract?
A. The legal terms of the contract
B. Something of value exchanged between parties
, C. A verbal agreement only
D. A company policy
B. Something of value exchanged between parties – Consideration is the
benefit or detriment exchanged that makes a contract legally binding.
9. Which of the following best describes fiduciary duty?
A. Obligation to maximize profit at all costs
B. Legal responsibility to act in another’s best interest
C. Right to terminate contracts without notice
D. Requirement to pay taxes promptly
B. Legal responsibility to act in another’s best interest – Fiduciary duty is
the duty of loyalty and care owed by one party to another, often in business
or financial relationships.
10.A “business license” is required to:
A. Hire employees
B. Operate legally within a jurisdiction
C. Increase profits
D. Draft contracts
B. Operate legally within a jurisdiction – Licensing ensures businesses
comply with local regulations and standards.
11.Which of the following is considered a fixed cost?
A. Raw materials
B. Rent
C. Sales commission
D. Packaging
B. Rent – Fixed costs remain constant regardless of the business’s level of
production or sales.
12.What is the main purpose of antitrust laws?
A. To protect trade secrets
B. To prevent monopolies and promote competition
C. To enforce tax regulations
D. To regulate employee benefits
