ESB V.2 Practice Tests

Front

What legal structure should you choose for your small business if you want to grow, sell shares to the public, and avoid personal responsibility for business liabilities? Options: Limited Liability Company, S-Corporation, C-Corporation, Sole Proprietorship.

Back

C-Corporation

Answer explanation

A C-Corporation is the best choice as it allows for growth, selling shares publicly, and limits personal liability. It can have foreign partners and provides the desired liability protection.

Front

Which of these is a characteristics of a successful entrepreneur mindset?
Options: Likes to argue, Lives in a dreamworld, Makes friends quickly, Doesn't give easily

Back

Doesn't give easily

Answer explanation

The correct characteristic of a successful entrepreneur mindset is that they don't give up easily, showing resilience and determination.

Front

Which is one of the greatest risks of being an entrepreneur? Options: Damage to reputation, Financial instability, No control over schedule, Loss of experience

Back

Financial instability

Answer explanation

Financial instability is one of the greatest risks of being an entrepreneur as it can lead to business failure and personal financial struggles.

Front

What is a primary benefit of starting a new business without purchasing a franchise or buying an existing business?

Back

Developing your own rules

Answer explanation

The primary benefit of starting a new business without purchasing a franchise or buying an existing business is developing your own rules, allowing for more flexibility and creativity in decision-making.

Front

What is Entrepreneurship?

Back

Setting up a business with the aim to make a profit

Answer explanation

Entrepreneurship is the act of setting up a business with the aim to make a profit, making it the correct choice among the options provided.

Front

What legal structure should you set up for your small business if you want benefits of large corporations, avoid double taxation, have four partners as shareholders, and seek protection from business liabilities? Options: Sole Proprietorship, C-Corporation, Limited Liability Company, S-Corporation

Back

S-Corporation

Answer explanation

An S-Corporation provides limited liability protection like a C-Corporation but avoids double taxation by passing income through to shareholders. It is suitable for small businesses with a few shareholders.

Front

An example of ________ compensation is paying field laborers for the amount of fruit they pick.

Back

Piece Work

Answer explanation

Piece Work compensation involves paying workers based on the quantity of work completed, such as paying field laborers for the amount of fruit they pick.

Front

A ________ employee receives a set amount of pay each month without overtime compensation for extra hours worked.

Back

Salary

Answer explanation

A salary employee receives a set amount of pay each month without overtime compensation for extra hours worked, making it the correct choice.

Front

Employees most affected by minimum wage laws are compensated ________.

Back

Hourly

Answer explanation

Employees most affected by minimum wage laws are compensated hourly, as minimum wage laws typically set a minimum hourly rate of pay for workers.

Front

An employee who is paid a percentage of a sale is paid by ________.

Back

Commission

Answer explanation

An employee who is paid a percentage of a sale is paid by Commission.