Sarah Has Just Been Made a Member of the Bar

question 8

Multiple Choice

Sarah has just been made a member of the bar and is going to open her own law office. You will be her first employee! What advice can you give her about professional liability insurance.

• A) It would be a good idea to research state law to find out if professional liability insurance is mandatory in your state. She will need a different policy to insure the firm for bodily injury and property damage because professional liability insurance covers direct financial loss and expense to the legal professional that arise from claims of neglect, omissions or errors, but not intentional torts.
• B) professional liability insurance does not cover bodily injury or property damage.
• C) professional liability insurance covers direct financial loss and expense to the legal professional that arise from claims of neglect, omissions or errors, but not intentional torts.
• D) some states require lawyers to have professional liability insurance (so we should go look that up.)

---

Definitions:

Periodic Method

An accounting method where inventory and cost of goods sold (COGS) are determined at the end of an accounting period, as opposed to continuously tracking these figures.

Tax Rate

Represents the percentage at which an individual or corporation is taxed, often varying based on income level, type of income, or jurisdiction.

Sale Price

The actual price at which a commodity or service is sold to customers.