Mississippi Contractors Business Law &
Regulation Exam – Practice Questions &
Answers
the top reasons businesses fail - ANSWER ✔---- poor sales
- competitive weakness
- high operating expenses
- difficulty collecting invoices
- inventory problems
- too many fixed assets
- poor location
- fraud
AKA poor planning and inadequate management
entrepreneur - ANSWER ✔---a person engaged in strategic activities that involve the initiation and
development of a new business, created to build long term value and steady cash flow statements
calculated risk - ANSWER ✔---a risk that is well - thought through where all outcomes are
considered
,business plan - ANSWER ✔---- living document that changes as your business and the market change
- blueprint of your business
- outlines strategies
key functions of a business plan - ANSWER ✔---1. planning tool: road map for growth of business
2. loan or investor document: used to get a loan to show growth, qualifications and competitive adv.
3. benchmarking tool: measure company's performance and see why things happened
elements of a business plan - ANSWER ✔---- cover page: contact info and confidentiality statement
- executive summary: highlights of plan, written last
- company summary: vision, mission, legal structure, management, location, and facilities
- products and services: subcontractors and suppliers
- market analysis: your market
- marketing strategy: pricing, advertising, uniqueness of product or service
- financial plan: balance sheets etc.
Guidelines for business plan - ANSWER ✔---- make sure assumptions are realistic
- keep language simple
- cover the risks and opportunities
- analyze your competition
benefits of business plan - ANSWER ✔---- used as a planning and bench marking tool
- sometimes required by bank loan officers
Sole Proprietorships - ANSWER ✔---- many businesses begin as this
- simplest ownership form to set up
- you are the sole owner of the company
, - exposes you to unlimited liability for the business debt
- not good if you are running a significant business
- terminated upon owners death
- you own the assets of the company so if you sell you are selling the assets of the company
- you bear personal liability for all actions undertaken in the name of the business
- do not pay corporate tax income; your net income from the business is reported as ordinary income
- business and personal expenses must be kept separate
advantages of sole proprietorship - ANSWER ✔---- minimal legal restrictions
- simple ownership form
- low start up costs
- sole ownership of profits
- freedom in decision making process
disadvantages of a sole proprietorship - ANSWER ✔---- unlimited personal liability
- less available capital
- difficulty in obtaining long term financing
- dissolution of the business in the event of owners death
partnership - ANSWER ✔---relationship between two or more persons who join to carry on a trade
or business
- each person contributes money, property, labor, or skills
- two types: general and limited partnerships
general partnerships - ANSWER ✔---can be formed through oral agreement
- own the assets of the company just like a sole proprietorship
- have personal and unlimited liability
- each partner is responsible for the acts of other partners when they act in the name of the business
Regulation Exam – Practice Questions &
Answers
the top reasons businesses fail - ANSWER ✔---- poor sales
- competitive weakness
- high operating expenses
- difficulty collecting invoices
- inventory problems
- too many fixed assets
- poor location
- fraud
AKA poor planning and inadequate management
entrepreneur - ANSWER ✔---a person engaged in strategic activities that involve the initiation and
development of a new business, created to build long term value and steady cash flow statements
calculated risk - ANSWER ✔---a risk that is well - thought through where all outcomes are
considered
,business plan - ANSWER ✔---- living document that changes as your business and the market change
- blueprint of your business
- outlines strategies
key functions of a business plan - ANSWER ✔---1. planning tool: road map for growth of business
2. loan or investor document: used to get a loan to show growth, qualifications and competitive adv.
3. benchmarking tool: measure company's performance and see why things happened
elements of a business plan - ANSWER ✔---- cover page: contact info and confidentiality statement
- executive summary: highlights of plan, written last
- company summary: vision, mission, legal structure, management, location, and facilities
- products and services: subcontractors and suppliers
- market analysis: your market
- marketing strategy: pricing, advertising, uniqueness of product or service
- financial plan: balance sheets etc.
Guidelines for business plan - ANSWER ✔---- make sure assumptions are realistic
- keep language simple
- cover the risks and opportunities
- analyze your competition
benefits of business plan - ANSWER ✔---- used as a planning and bench marking tool
- sometimes required by bank loan officers
Sole Proprietorships - ANSWER ✔---- many businesses begin as this
- simplest ownership form to set up
- you are the sole owner of the company
, - exposes you to unlimited liability for the business debt
- not good if you are running a significant business
- terminated upon owners death
- you own the assets of the company so if you sell you are selling the assets of the company
- you bear personal liability for all actions undertaken in the name of the business
- do not pay corporate tax income; your net income from the business is reported as ordinary income
- business and personal expenses must be kept separate
advantages of sole proprietorship - ANSWER ✔---- minimal legal restrictions
- simple ownership form
- low start up costs
- sole ownership of profits
- freedom in decision making process
disadvantages of a sole proprietorship - ANSWER ✔---- unlimited personal liability
- less available capital
- difficulty in obtaining long term financing
- dissolution of the business in the event of owners death
partnership - ANSWER ✔---relationship between two or more persons who join to carry on a trade
or business
- each person contributes money, property, labor, or skills
- two types: general and limited partnerships
general partnerships - ANSWER ✔---can be formed through oral agreement
- own the assets of the company just like a sole proprietorship
- have personal and unlimited liability
- each partner is responsible for the acts of other partners when they act in the name of the business
