ESB V.2 EXAM 2 QUESTIONS AND
ANSWERS ALREADY GRADED A
In general, which two characteristics define a "small" business? (Choose two) ✔✔Fewer then
1,500 employees
AND
Less than $35.5 million revenue
Classify each of the following businesses as either Physical or Digital. ✔✔Physical:
- Bakery !in !your !community
- Hair !salon !that !makes !appointments !online
Digital:
- Online !store !that !dropships !camping !gear
!- !Bookstore !on !Amazon !that !sells !eBooks
,You !need !to !create !a !legal !structure !for !your !small !business. !You !have !plans !for !it !to !grow !and
hope !in !the !future !to !sell !shares !to !the !public. !Your !startup !partners !are !citizens !of !Mexico !and
Japan. !You !do !not !want !to !be !personally !responsible !for !business !liabilities.
Which !legal !structure !should !you !set !up !for !your !business? !✔✔C-Corporation
Match !each !business !management !role !to !its !corresponding !description.
To !answer, !move !each !role !from !the !list !on !the !left !to !its !description !on !the !right. !✔✔COO:
Oversees !the !day-to-day !administrative !functions !of !a !business; !second !in !command.
CIO: !Develops !policies !and !structures !to !protect !company !data.
CFO: !Creates !budgets, !analyzes !financial !data, !and !forecasts !company !profits.
CEO: !The !highest-ranking !employee !in !the !company; !reports !to !the !board !of !directors.
, You !own !a !lawn !care !business. !You !have !employees !who !work !long !hours !laboring !in
!good !weather, !often !exceeding !40 !hours !per !week. !They !also !work !short !hours !when !the
!weather !is !bad, !sometimes !they !can't !work !at !all. !You !do !all !of !the !sales !for !your
!business.
Which !two !types !of !compensation !would !be !appropriate !for !these !landscape !employees?
✔✔Salary !& !Hourly
Match !each !Stage !of !the !Business !Life !Cycle !to !its !corresponding !description.
To !answer, !move !each !stage !from !the !list !on !the !left !to !its !description !on !the !right.
!✔✔Maturity:
The !business !is !separate !from !the !owner !with !responsibilities !delegated !to !staff. !A !business !in
this !stage !usually !commands !a !considerable !share !of !the !market !and !may !even !be !a !household
name.
Success: !Company !is !stable !and !profitable.
Takeoff: !Expansion !strategies !are !implemented, !and !investment !is !balanced !with !potential.
Survival !of !the !Fittest: !Focus !shifts !to !revenue, !expenses, !and !growth. !Cashflow !is !the
!major !issue.
ANSWERS ALREADY GRADED A
In general, which two characteristics define a "small" business? (Choose two) ✔✔Fewer then
1,500 employees
AND
Less than $35.5 million revenue
Classify each of the following businesses as either Physical or Digital. ✔✔Physical:
- Bakery !in !your !community
- Hair !salon !that !makes !appointments !online
Digital:
- Online !store !that !dropships !camping !gear
!- !Bookstore !on !Amazon !that !sells !eBooks
,You !need !to !create !a !legal !structure !for !your !small !business. !You !have !plans !for !it !to !grow !and
hope !in !the !future !to !sell !shares !to !the !public. !Your !startup !partners !are !citizens !of !Mexico !and
Japan. !You !do !not !want !to !be !personally !responsible !for !business !liabilities.
Which !legal !structure !should !you !set !up !for !your !business? !✔✔C-Corporation
Match !each !business !management !role !to !its !corresponding !description.
To !answer, !move !each !role !from !the !list !on !the !left !to !its !description !on !the !right. !✔✔COO:
Oversees !the !day-to-day !administrative !functions !of !a !business; !second !in !command.
CIO: !Develops !policies !and !structures !to !protect !company !data.
CFO: !Creates !budgets, !analyzes !financial !data, !and !forecasts !company !profits.
CEO: !The !highest-ranking !employee !in !the !company; !reports !to !the !board !of !directors.
, You !own !a !lawn !care !business. !You !have !employees !who !work !long !hours !laboring !in
!good !weather, !often !exceeding !40 !hours !per !week. !They !also !work !short !hours !when !the
!weather !is !bad, !sometimes !they !can't !work !at !all. !You !do !all !of !the !sales !for !your
!business.
Which !two !types !of !compensation !would !be !appropriate !for !these !landscape !employees?
✔✔Salary !& !Hourly
Match !each !Stage !of !the !Business !Life !Cycle !to !its !corresponding !description.
To !answer, !move !each !stage !from !the !list !on !the !left !to !its !description !on !the !right.
!✔✔Maturity:
The !business !is !separate !from !the !owner !with !responsibilities !delegated !to !staff. !A !business !in
this !stage !usually !commands !a !considerable !share !of !the !market !and !may !even !be !a !household
name.
Success: !Company !is !stable !and !profitable.
Takeoff: !Expansion !strategies !are !implemented, !and !investment !is !balanced !with !potential.
Survival !of !the !Fittest: !Focus !shifts !to !revenue, !expenses, !and !growth. !Cashflow !is !the
!major !issue.
