Certiport ESB Practice Exam 4

Anya wants to set up a legal structure for her food delivery service. Which of the following is not a question she should she ask herself to help her make her decision?

• Is it important for me to make all of the decisions for the business?

• Do I even need to set up a legal structure?

• Will this business be too risky for me to start it alone?

• Do I have any personal assets that I want to make sure are protected?

Match the types of business legal structures with each of their main benefits:

1 Sole proprietorship, 2 General partnership, 3 C corporation, 4 S corporation, 5 Nonprofit corporation, 6 Limited liability company; A Pays no U.S. federal taxes, B Easiest to set up, C Liability split with another person, D Provides single person with greater liability protection, E High level of protection and individual tax rate, F Easier to raise/borrow money

• 1=D, 2=C, 3=F, 4=E, 5=A, 6=B

• 1=C, 2=B, 3=F, 4=E, 5=A, 6=D

• 1=E, 2=C, 3=F, 4=B, 5=A, 6=D

• 1=B, 2=C, 3=F, 4=E, 5=A, 6=D

Match the definitions that best describe each of the following components of financing a business: 1 Emergency fund, 2 Reserve for fixed expenses, 3 Startup expenditures, 4 Startup investment; A One‐time purchases you need to get the business running, B One‐time sum requested from investors to start the business, C Money to cover the fixed expenses for at least three months, D Money reserved to cover emergencies in the first three months

• 1=B, 2=C, 3=A, 4=D

• 1=D, 2=C, 3=A, 4=B

• 1=C, 2=D, 3=A, 4=B

• 1=A, 2=C, 3=D, 4=B

Haruto is starting a business that matches parents with babysitters through a website. Taking a lean startup

approach, he is launching a MVP of his website and is only looking for a startup investment to cover the first three

months of operations. After that, he will look to more funding for the second phase. To start the business and get through the first three months, he will need the following: • Computer: $700, • Website hosting fee: $100 (annual but paid up front), • Business license: $200 (annual but paid up front), • Reserve for 3 months of fixed expenses (pays $500 a month in fixed expenses), • Emergency fund: 1/2 of startup expenditures. What is the amount of startup investment Haruto will need to launch his website?

• $1,500

• $2,250

• $3,000

• $4,500

Which of the following U.S. government federal agencies is responsible for reducing the harmful impact that businesses might have on the environment?

• A Occupational Safety and Health Administration (OSHA)

• B Internal Revenue Service (IRS)

• C Environmental Protection Agency (EPA)

• D Small Business Association (SBA)

Darby is the owner of a taco truck that parks in busy areas of his city at lunchtime. One day, a traffic officer tells him that he is not allowed to park his food truck in the busy part of the city without the city’s consent. What is Darby most likely missing?

• A Permit

• B Certificate

• C Zoning variance

• D Severance pay

Match the following sources of obtaining startup financing with the main disadvantage associated with each: 1 Equity funding, 2 Debt funding, 3 Bootstrapping, 4 Crowdfunding; A Can take a while to obtain enough people willing to contribute, B All money must be paid back, most often along with expensive interest, C Risk of losing personal savings, D Money comes in exchange for giving up a share of control of the business

• 1=D, 2=B, 3=C, 4=A

• 1=A, 2=B, 3=C, 4=D

• 1=D, 2=C, 3=B, 4=A

• 1=A, 2=B, 3=D, 4=C

Rupa is trying to start a consulting business in which she needs $10,000 to launch. She is trying to decide between a 2‐year bank loan at a 5% compound interest rate, or, a 2‐year loan from a family member at a 5% simple interest rate. Which loan should she choose based on what she will owe after the two years?

• Bank Loan: $100,000; Family Loan: $50,000; She should choose the family loan.

• Bank Loan: $11,025; Family Loan $11,000; She should choose the bank loan.

• Bank Loan: $100,000; Family Loan: $50,000; She should choose the bank loan.

• Bank Loan: $11,025; Family Loan $11,000; She should choose the family loan.

Which of the following U.S. government federal agencies would be helpful to turn to if an entrepreneur had no business training and needed assistance writing a business plan?

• Small Business Association (SBA)

• Environmental Protection Agency (EPA)

• Internal Revenue Service (IRS)

• Occupational Safety and Health Administration (OSHA)

Aiyana sells homemade smoothies at a local park during the summer. She’s concerned about meeting all the regulations around selling food. She only makes $15,000 a year and does not have a lot of money to spend on that process. Which exception granted by the government might help her in this scenario?

• Businesses with fewer than 10 employees are exempt from some parts of the Americans with Disabilities Act.

• Food sellers earning less than $50,000 a year do not need to include nutrition facts on labels.

• Businesses that use sustainable practices are eligible for tax credits.

• Food sellers can work with agencies to establish workplace safety standards.