ESB REVIEW

Sole Proprietorship.

• Easiest to set up, but exposes the owner to unlimited financial liability

• Difficult to set up, but protects the owner from all financial liability

• Complicated to set up, but limits the owner's financial liability

General/Limited Partnership.

• The surviving partner would be required to buy out the deceased partner's share of the partnership.

• would automatically terminate upon the death of one of the partners?

• The death of one of the partners would result in the automatic renewal of the partnership.

• The deceased partner's share of the partnership would be automatically transferred to a random third party.

Which type of business legal structure is not owned by anybody and does not pay any U.S. federal taxes

T/F: A limited liability company would be the best option for a single mom seeking low-risk.

• True

• False

A C corporation is similar to an S corporation but.....

An S corporation is the best business structure for

The partners of an awning repair shop are assessing the amount of money needed to start a business at a new location. The partners have calculated that the business will generate more than enough revenue to cover monthly expenses after its second month in operation.

Here are the start-up expenses:

Equipment Lease (monthly): $3,000

Materials and supplies (monthly): $20,000

Licensing (annual but must be paid upfront in a lump sum): $200

Payroll (monthly): $12,000

Advertising (monthly): $1,000

Operating expenses (monthly insurance, utilities, and rent): $2,000

1-TIME Security Deposit for electricity: $1,000

Contingency (to cover 10% of start-up investment)

How do you calculate the amount of start-up capital required to open the business in this scenario?

• 84,290

• 76,879

• 64,960

• 100,210

Answer explanation

3,000 x 2 = 6,000

20,000 x 2 = 40,000

Licensing = 200

12,000 x 2 = 24,000

Ad = 1,000

2,000 x 2 = 4,000

Security deposit = 1,000

Subtotal: 77,200

Contigency = 10%

77,200(10%) = 7,720

77,200 + 7,720 = 84,920

Which of these is needed to verify to a food truck employer that their employees are qualified in food handling?

• license

• pass

• zoning variance

• certificate

An individual starts a babysitting business with a loan of $1,000. The loan is for 2 years at 5% COMPOUND interest rate. How much will the individual owe by the end of the 2 year term (future value of loan)?

• $1,100.00

• $1,102.50

• 1,050.00

• $1,100.50

Answer explanation

End of year 1:

1,000 x .05 = 50; 1,000 + 50.00 = 1,050

End of year 2: 1,050 x .05 = 52.50; 1,050 +52.50 = 1,102.50

Management buyout

• ​ The act of transferring ownership to people who already operate the business

• the first sale of a company's stock to the public.

• allows the company to raise funds from public investors in exchange for ownership stakes in the company.

• is a retirement benefit plan that allows employees to own shares of their employer's company stock as part of their retirement savings.

• extracting value from a mature investment or business through liquidation or distribution of profits to maximize returns.