ESB v2 Domain 4 exam questions and answers 2024

Balance Sheet A document that compares assets to liabilities plus owner's equity. Income Statement A financial statement that details a business's revenue and expenses for a given period. Break-Even Point The point where a business's revenue matches its expenses over a given period. Profit Margin The net profit the company wants to make from the sale and is usually represented using a percentage. Selling Price Formula [(cost) * (desired profit margin)] + (cost) Ben owns a shoe store. He has a new line of limited-edition running shoes that he will be selling in his store soon. The cost of manufacturing the shoes was $18 per pair, and he wants to make a 20% profit on each pair he sells. What is Ben's selling price? $21.60 Adam owns a restaurant. A new dish is being added to the restaurant's menu. The cost of making the dish is $6.75, and he wants to make a 33% profit on each dish he sells. What is Adam's selling price? $8.98 Cory owns a home goods store. He is about to add a new line of candles to his store. The cost of manufacturing the candles is $8.46 per candle, and he wants to make a 52% profit on each candle. What is Cory's selling price? $12.94 Equity Formula (assets) - (liabilities) Asset A tangible item a business owns. Liability The amount of money owed to an entity. Mallory owns an auto repair shop. She has $12,000 in cash, $8,000 in inventory, a $4,000 credit card balance, and $3,500 in long-term debt. What is Mallory's equity? $12,500 Ashley sells cars. She has $26,000 in cash, $34,000 in inventory, a $4,600 credit card balance, and $7,900 in long-term debt. What is Ashley's equity? $47,500 We have an expert-written solution to this problem! Mindy owns a restaurant. She has $14,200 in cash, $2,600 in inventory, $5,000 in equipment, a $3,800 credit card balance, and $1,400 in long-term debt. What is Mindy's equity? $16,600 Net Income Formula (income) - (cost of goods + cost of expenses) Gross Income Formula (income) - (cost of goods) Income Tax Expense Formula (gross profit) * tax rate Break-Even Point Formula (total expenses) / (sale price) Mallory sells hats. Last month, Mallory had an income of $3,800, her cost of goods was $875, and her total expenses were $1,400. What was Mallory's gross income? $2,925 Karen's income last month was $5,400. Her cost of goods was $925, and her total expenses were $3,300. What was Karen's net income? $1,175 Gabe owns a candied nut cart. He sells his cup of nuts for $6, and his monthly cost is $810. How many cups of candied nuts does Gabe need to sell to break even? $135 Jane owns a dress-making business. Her income last quarter was $8,000, her cost of goods was $1,500, and her total expenses were $3,000. What were Jane's gross income and net income? Gross Income: $6500 Net Income: $3,500 Chuck owns a pizza shop. He only sells large pizzas and charges $18 per pizza. His total monthly cost is $2,600. How many pizzas does Chuck have to sell to break even each month? 145 Fixed Costs Costs a business has that remain the same no matter the volume of production. Variable Costs Fluctuating costs that a business has depending on production. Burn Rate A calculation used to measure a business's monthly cash flow. Run Rate A calculation used to make projections about a company's future performance. ROI Return on investment is a calculation used to determine how much an investment is making. Is rent fixed or variable cost? Fixed Is a credit card bill fixed or variable cost? Variable