Entrepreneurship and Small Business
Certification Exam
Types of Sales Channel - CORRECT ANSWER
1. Business-to-Business (B2B): a transaction or business conducted between one business and
another, such as a wholesaler and retailer.
2. Business-to-Consumer (B2C): process of businesses selling products/services directly to
consumers, with no middle person.
3. Retail: sell items or services to customers.
4. Wholesale: the act of buying goods in bulk from a manufacturer at a discounted price and
selling to a retailer.
Acquisition Costs - CORRECT ANSWER
These costs include shipping, sales taxes, customs fees, site preparation, installation, testing,
surveying, closing fees, and paying off liens.
Angel Investor - CORRECT ANSWER
A wealthy private investor who provides capital for a business start-up for a stake in the
business.
Asset - CORRECT ANSWER
A tangible item a business owns. Can be physical (machinery) or intangible (intellectual
property).
Balance Sheet - CORRECT ANSWER
A financial statement comparing ASSETS to LIABILITIES + owner's EQUITY on a
specific date.
• Equipment = Long term assets
• Bank loans = Current liabilities
• Inventory = Current assets
• Mortgage payments = Long term liabilities
Bootstrapping - CORRECT ANSWER
A TYPE OF FUNDING: using own money to fund a business.
Break-Even Point - CORRECT ANSWER
The point where revenue matches expenses.
Formula: Break-Even Point = Fixed Cost / (Selling Price per Unit - Variable Cost per Unit)
Budget - CORRECT ANSWER
The amount of money a business plans on spending during a period.
, Burn Rate - CORRECT ANSWER
Measures monthly cash flow.
Burn Rate = (Month Starting Balance - Month Ending Balance)
Business Plan - CORRECT ANSWER
A written document describing objectives and plans from marketing, financial, and
operational standpoints.
Legal structures for a corporation - CORRECT ANSWER
1. C Corp: owners taxed separately; DOUBLE TAXATION.
2. S Corp: Avoids double taxation, owners not personally liable.
3. LLC: Protects personal assets, owners not personally liable.
4. Sole Proprietorship: easy to form, unlimited personal liability.
Business Ownership - CORRECT ANSWER
1. CEO – top executive, reports to board
2. COO – handles daily operations
3. CFO – manages company finances
4. CIO – manages IT and data security
Confidentiality Agreement - CORRECT ANSWER
Signed agreement not to disclose shared information.
Contract - CORRECT ANSWER
Outlines employee-company obligations and terms.
Elements of the Design Thinking Process - CORRECT ANSWER
1. Emphasize
2. Define
3. Ideate
4. Prototype
5. Test
Difference between small businesses and entrepreneurs? - CORRECT ANSWER
Small businesses avoid new opportunities; entrepreneurs pursue profit.
Compensation Types - CORRECT ANSWER
1. Piece work
2. Salary
3. Hourly
4. Commission
5. Equity
Certification Exam
Types of Sales Channel - CORRECT ANSWER
1. Business-to-Business (B2B): a transaction or business conducted between one business and
another, such as a wholesaler and retailer.
2. Business-to-Consumer (B2C): process of businesses selling products/services directly to
consumers, with no middle person.
3. Retail: sell items or services to customers.
4. Wholesale: the act of buying goods in bulk from a manufacturer at a discounted price and
selling to a retailer.
Acquisition Costs - CORRECT ANSWER
These costs include shipping, sales taxes, customs fees, site preparation, installation, testing,
surveying, closing fees, and paying off liens.
Angel Investor - CORRECT ANSWER
A wealthy private investor who provides capital for a business start-up for a stake in the
business.
Asset - CORRECT ANSWER
A tangible item a business owns. Can be physical (machinery) or intangible (intellectual
property).
Balance Sheet - CORRECT ANSWER
A financial statement comparing ASSETS to LIABILITIES + owner's EQUITY on a
specific date.
• Equipment = Long term assets
• Bank loans = Current liabilities
• Inventory = Current assets
• Mortgage payments = Long term liabilities
Bootstrapping - CORRECT ANSWER
A TYPE OF FUNDING: using own money to fund a business.
Break-Even Point - CORRECT ANSWER
The point where revenue matches expenses.
Formula: Break-Even Point = Fixed Cost / (Selling Price per Unit - Variable Cost per Unit)
Budget - CORRECT ANSWER
The amount of money a business plans on spending during a period.
, Burn Rate - CORRECT ANSWER
Measures monthly cash flow.
Burn Rate = (Month Starting Balance - Month Ending Balance)
Business Plan - CORRECT ANSWER
A written document describing objectives and plans from marketing, financial, and
operational standpoints.
Legal structures for a corporation - CORRECT ANSWER
1. C Corp: owners taxed separately; DOUBLE TAXATION.
2. S Corp: Avoids double taxation, owners not personally liable.
3. LLC: Protects personal assets, owners not personally liable.
4. Sole Proprietorship: easy to form, unlimited personal liability.
Business Ownership - CORRECT ANSWER
1. CEO – top executive, reports to board
2. COO – handles daily operations
3. CFO – manages company finances
4. CIO – manages IT and data security
Confidentiality Agreement - CORRECT ANSWER
Signed agreement not to disclose shared information.
Contract - CORRECT ANSWER
Outlines employee-company obligations and terms.
Elements of the Design Thinking Process - CORRECT ANSWER
1. Emphasize
2. Define
3. Ideate
4. Prototype
5. Test
Difference between small businesses and entrepreneurs? - CORRECT ANSWER
Small businesses avoid new opportunities; entrepreneurs pursue profit.
Compensation Types - CORRECT ANSWER
1. Piece work
2. Salary
3. Hourly
4. Commission
5. Equity
