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WorksheetsESB REVIEW
Total questions: 69
Worksheet time: 36mins
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
(a)
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 (a)
An S corporation is the best business structure for
(a)
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
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
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.
An interior designer has learned that she must pay self-employment tax on her individual earnings.
Which tyoe of legal structure must pay self-employment tax?
Sole Proprietorship
S corporation
C corporation
Limited liabilty companies
An entrepreneur notices new demand for products featuring characters from a recent movie. The entrepreneur finds a manufacturer of kitchen products featuring these character. Based on the scenario provided, what should be a primary concern of this entrepreneur?
reliabilty of supply
advertising the items
inventory storage
shipping
The owner of a new landscaping company has set a number of milestones for the first year of his business. Achieving which of the following goals will show that the business has broken even or better?
profitable operations
total number of employees
sales targets
total number of customers
The owner of a tire shop in a large city wants to reach the largest number of people possible with promotional efforts. Which method should be used?
Flyers
Billboards
TV ads
Customer referrals
A __________ is a finacial statement that summarizes a copany's asssets, liabilties, and shareholders' equity at a specific point in time.
Balance Sheet
Statement of cashflow
Earnings statement
Income statement
Which of these effect your credit score?
Payment history (35%)
Amounts Owed (10%)
New Accounts (10%)
Balances Deducted (20%)
Length of credit history (15%)
Which two options are advantages of purchasing a franchise
Branding
Guaranteed Profits
Marketing Assistance
Proven Location
A photographer wants to turn her hobby into a business. She is researching the business options available.
When 100 potential customers were surveyed, they provided the following responses:
10 said they’d use a loved one,
20 said they’d want to hire a photographer w/ samples posted online
60 said they’d hire from a studio
10 said they’d hire a photographer from a referral.
Customer reported they are willing to spend the following amounts for a photography package.
-$100 or less: 20
$100-500: 45
$500-1K: 30
$1K or more: 5
Which opportunity for starting a photo business would have the highest probability of success?
Setup a studio gallery of sample photography
Ask friends to write referrals for you.
Build an online storefront and post samples
Advertise photography services to friends and family on social media
Key components of a value proposition
overview of the business
What services will be offered
Financial reports
Information about the industry of the business
How the business sets itself apart
Which of these components is not included in a business plan
capital
defining a concept
assessing competition
attracting customers
What is the primary advantage of the General Partnership vs. Sole Propertiorship?
Limited liability
Lower tax rate
Stockholders make decision
More than one person responsible for financial banking.
Which business legal structure will protect a business owner without partners from lawsuit?
C Corportarion
LLC
Nonprofit
Sole Proprietorship
A beekeeper wants to start a seasonal business renting hives to farmers to pollinate their orchard and crops. The beekeeper believes the business will cover its own costs after three months and that start up expenses for high trucking another cost through that time will be $18,000.
They raised money and ask the bank to loan the remaining start-up capital needed. The bank asks the beekeeper to complete a form with the following information.
A. Estimated StartUp Expenditures:
B. Contingency Amount (10% of A):
C. Start-Up Capital (A + B):
D. Required Cash Reserve (50% of C):
E: Total Financing Required (C + D):
What is the Total Financing Required for the Beekeeper?
$36K
$19.8K
$29.7K
$18K
Government banked currency!
(a)
where should a chef go to obtain a list of restaurants in the nearby towns?
Local COC
IRS
Small Business Association
Internet services are outsourced in most small businesses?
T
F
What are the tax implications for a sole proprietorship?
Income earned by a sole proprietorship passes to one owner to be taxed
Tax liability is paid by the corporation
Owners have no personal liability for the payment of the taxes!
True or False?
All income and expenses acquired by a sole proprietorship belongs to the owner and affects their tax liability!
True
False
In order to protect the intellectual property rights for a product design, what should an entrepreneur do?
Copyright the design
Apply for a patent!
Register a company trademark
Which of these terms represents the steps in key processes are divided among 2 or more people so no one individual can act alone to subvert a process for their benefit! It is used to share workload and protect against fraud
Internal auditing
Middle management
Separation of duties
Cross training
Select the 4 steps in the selling process?
Closing the sale and following up by providing the good or service.
Setting up the sales meeting
Preparing a sales pitch when speaking to potential customers
Making the contact with potential customers
Finding and qualifying sales leads
A consultant wants to use a form of personal communication to market his services to business during a conference
Which form of communication should be used?
Newspaper advertising
Posting on social media
Radio advertising
Networking
When a business applying for a loan at a bank, what is recommended to be put in place in the case of the failure of the business?
(a)
Building permits paid by a carpenter for new and remodeled decks would be a _____ cost!
Fixed!
Variable!
Traveling to the residents of customers who are being provided a service would be….
Fixed!
Variable!
Why would a service charge more for purchases made with a credit card!
To attract more customers
To discourage the use of credit cards
To protect credit card users from theft
To offset any processing fees charged by credit card companies
A business has an initial inventory balances of $6,000! New inventory purchases were $4,000. $3,500 of the inventory were provided to the customers!
What is the ending inventory value
$13.5K
$6.5K
$7.5K
$10K
The owner of a gardening business is developing a cash flow budget for the coming month! The owner projects that the company will complete 100 client jobs at an average charge of $55.00 each.
Equipment rental = $1,000
Gas expenses = $150
Insurance = $50
Payroll = $2,450
If the beginning cash balance is $1,500, what will be the ending cash balance?
$5,350.00
$1,850.00
$3,350.00
$2,350.00
An electrician has fixed costs if $1,500.00 per month. The only variable costs needed are for labor and supplies. The average variable cost is $70.00 per repair, and the average service paid by customers is $110.00 per repair.
How many repairs are needed to break even for the year?
450
3,000
110
50,000
What is the best way for a business do to create more loyal customers?
Lower the prices
Find a more convenient location
Make a social media page and modify the business based off of the customer’s suggestions.
Offer a free coupon for every order.
3 reasons to buy an existing franchise rather than starting one from scratch.
Easier financing
Exclusive geographical area
Guaranteed income
Proven system
No liability
To evaluate a demand for a business, a business owner must identify which of the following before moving to a new area?
Amount of competitors in an area
If there are dependable people that can be hired in that area
Spending habits of people in that area
Is there an affordable space to store manufacturing equipment
Identifying customers based on their sensitivity to spending is based off of which method of segmentation?
Demographic
Psychographic
Behavioral
Geographic
T/F
A fixed cost never waivers no matter the conditions!
T
F
Primary drawback of a Sole Proprietorship
Unlimited liability
Attorney required to set up
Must answer to shareholders.
Double taxation
An entrepreneur’s operational expenses add up to be $5,000 a month. Her business’s estimated income will be $10,000 a month.
True of False:
If she applies for a loan to a bank with a 35% standard debt ratio, her request for a loan will likely get approved based off of her financial situation.
True
False
Before the owner of the pet supply store can add a kennel to her facility, she must obtain a……..
Permit
License
Certificate of Validation
Zoning variance
If an owner of a business does not want to share ownership of a business, angel investing is a desirable method of obtaining financing for them.
True
False
Angel investors do not expect payment until after a business starts making money.
True
False
A nonprofit association comprised of volunteer counselors, advisors, and mentors who offer free mentoring and counseling to small business owners.
SCORE
HUD
USDA
SBA
The act of cashing out a business either through acquisition or merger.
Harvesting
Management Buyout
Initial Public OFFERING
Employee Stock Ownership Plan
Which responsibility would be included in the outsourcing of payroll and payroll-related functions of a business?
Benefits Administration
Providing Health Services
Student Placement Services
Employee Investing
The tax implications for a C corporation is a double tax rate! Who gets taxed with this type of business structure
Shareholders
Loan Providers
Trademarkers
Corporation
Copyright is automatically applied to a creative piece of work as soon as it is created!
Only true in certain cases
True
False
A few potential customers of a mechanic have chosen not to have work done, citing a deficit in necessary finances!
Which operating policy should the mechanic establish to keep the customers and acquire business from them?
90-day warranty
Lower prices
Payment terms on approved credit
Cash-back referrals
What part of the supply chain needs to be addressed when a manufacturer increases production costs to the point that an entrepreneur will barely break even?
Negotiated Costs
Communication
Raw Materials
Shipping commitment
Which of these is the best method for increasing sustainability?
Offering Incentives
Increasing Operational Hours
More Extensive Advertising
A landscaper averages $1,500 per sale and needs to earn $6,000 per month to break even. Through experiences he funds that 25%. of his active prospects buy within 30 days.
How many prospects should the landscaper have in the pipelines at all times at minimum?
16
15
14
12
T/F
Variable costs are always dependent
T
F
Most lenders prefer a credit score of — or higher.
(a)
A business owner sells ownership to a retirement fund for the employees of the business. What she is doing is referred to as
Management Buyout
Employee Stock Ownership planning
Harvesting
IPO
A 1-2 page document given to investors that includes key seeking points of an investment opportunity.
Oral Presentation
Executive Summary
Operational Business Plan
Investor Business Plan
Insurance and rent go into which category of an income statement?
operating expense
revenue
labor cost
Initial public offering
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.
Employee stock ownership plan
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.
Harvesting
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.
Select the 4 steps in the selling process?
Closing the sale and following up by providing the good or service.
Setting up the sales meeting
Preparing a sales pitch when speaking to potential customers
Making the contact with potential customers
Finding and qualifying sales leads
1st step of the selling process?
Closing the sale and following up by providing the good or service.
Setting up the sales meeting
Preparing a sales pitch when speaking to potential customers
Making the contact with potential customers
Finding and qualifying sales leads
2nd step of the selling process?
Closing the sale and following up by providing the good or service.
Setting up the sales meeting
Preparing a sales pitch when speaking to potential customers
Making the contact with potential customers
Finding and qualifying sales leads
