ESB Practice Exam 1

Which of the following is an advantage of starting a sole proprietorship?

• Limited liability

• Shared decision-making

• Easy to set up and full control

• Double taxation

A business plan primarily helps an entrepreneur:

• Secure funding and organize their strategy

• Guarantee business success

• Avoid paying taxes

• Immediately generate profit

What is the primary purpose of a market analysis in a business plan?

• To estimate the cost of starting the business

• To identify potential customers and competition

• To determine employee salaries

• To create a company logo

Which financial statement shows a company’s revenues, expenses, and profits over time?

• Balance Sheet

• Income Statement

• Cash Flow Statement

• Statement of Retained Earnings

What is equity financing?

• Borrowing money that must be repaid with interest

• Selling shares of the business to investors in exchange for capital

• Using company profits to fund growth

• Paying off business debt early

The break-even point is when:

• Total revenue equals total expenses

• The business begins making a profit

• The company runs out of cash

• The company pays off all debts

Which of the following is NOT a characteristic of an entrepreneur?

• Risk-taking

• Creativity

• Fear of failure

• Persistence

Which government agency is responsible for helping small businesses in the U.S.?

• IRS

• FTC

• SBA

• SEC

A target market is defined as:

• The largest possible audience for a product

• A group of people most likely to buy a product or service

• A list of potential investors

• Businesses that compete directly with you

What is the purpose of conducting a SWOT analysis?

• To analyze financial reports

• To evaluate a company’s Strengths, Weaknesses, Opportunities, and Threats

• To determine pricing strategies

• To assess customer feedback