Texas Business Broker Licensing Practice
Exam Questions And Correct Answers
(Verified Answers) Plus Rationales
2025|2026 Q&A | Instant Download Pdf
1. Which of the following best describes the role of a Texas business
broker?
a) Manage commercial property
b) Negotiate mergers and acquisitions
c) Facilitate the sale and purchase of businesses
d) Provide tax consulting services
Business brokers act as intermediaries between buyers and sellers in
business transactions.
2. In Texas, which regulatory body oversees business broker activities?
a) Texas State Securities Board
b) Texas Real Estate Commission (TREC)
c) Texas Department of Banking
d) Texas Comptroller's Office
TREC regulates individuals involved in business transactions involving real
property.
, 3. What document outlines the terms under which a business broker will
sell a business?
a) Letter of intent
b) Purchase and sale agreement
c) Listing agreement
d) Franchise disclosure document
The listing agreement is a contract between the seller and the broker
defining the broker’s authority and commission.
4. A broker must disclose their relationship with a party in the
transaction:
a) Only if asked
b) At the first substantive contact
c) After an offer is made
d) At closing
Disclosure at the first substantive discussion is required to prevent conflicts
of interest.
5. A business broker earns a commission when:
a) The listing agreement is signed
b) An offer is presented
c) A transaction is closed
d) A valuation is completed
Brokers typically earn their commission when the sale of the business
closes.
6. What is goodwill in a business sale?
a) Real estate value
b) Inventory cost
, c) Intangible value of reputation, customers, and brand
d) Value of fixed assets
Goodwill includes intangible assets like brand recognition, customer
loyalty, and reputation.
7. Which financial statement shows a business’s profitability over a
period of time?
a) Balance sheet
b) Income statement
c) Cash flow statement
d) Statement of equity
The income statement shows revenues, expenses, and profits/losses over a
specific period.
8. What valuation method uses projected future earnings?
a) Asset-based approach
b) Market approach
c) Income approach
d) Cost approach
The income approach values a business based on expected future earnings.
9. A business broker may NOT:
a) Advertise a business for sale
b) Facilitate buyer meetings
c) Provide legal advice
d) Assist in due diligence
Only licensed attorneys may provide legal advice. Brokers must refer
clients for legal matters.
Exam Questions And Correct Answers
(Verified Answers) Plus Rationales
2025|2026 Q&A | Instant Download Pdf
1. Which of the following best describes the role of a Texas business
broker?
a) Manage commercial property
b) Negotiate mergers and acquisitions
c) Facilitate the sale and purchase of businesses
d) Provide tax consulting services
Business brokers act as intermediaries between buyers and sellers in
business transactions.
2. In Texas, which regulatory body oversees business broker activities?
a) Texas State Securities Board
b) Texas Real Estate Commission (TREC)
c) Texas Department of Banking
d) Texas Comptroller's Office
TREC regulates individuals involved in business transactions involving real
property.
, 3. What document outlines the terms under which a business broker will
sell a business?
a) Letter of intent
b) Purchase and sale agreement
c) Listing agreement
d) Franchise disclosure document
The listing agreement is a contract between the seller and the broker
defining the broker’s authority and commission.
4. A broker must disclose their relationship with a party in the
transaction:
a) Only if asked
b) At the first substantive contact
c) After an offer is made
d) At closing
Disclosure at the first substantive discussion is required to prevent conflicts
of interest.
5. A business broker earns a commission when:
a) The listing agreement is signed
b) An offer is presented
c) A transaction is closed
d) A valuation is completed
Brokers typically earn their commission when the sale of the business
closes.
6. What is goodwill in a business sale?
a) Real estate value
b) Inventory cost
, c) Intangible value of reputation, customers, and brand
d) Value of fixed assets
Goodwill includes intangible assets like brand recognition, customer
loyalty, and reputation.
7. Which financial statement shows a business’s profitability over a
period of time?
a) Balance sheet
b) Income statement
c) Cash flow statement
d) Statement of equity
The income statement shows revenues, expenses, and profits/losses over a
specific period.
8. What valuation method uses projected future earnings?
a) Asset-based approach
b) Market approach
c) Income approach
d) Cost approach
The income approach values a business based on expected future earnings.
9. A business broker may NOT:
a) Advertise a business for sale
b) Facilitate buyer meetings
c) Provide legal advice
d) Assist in due diligence
Only licensed attorneys may provide legal advice. Brokers must refer
clients for legal matters.
