AAMI Small Business Management
Exam Questions and Verified Correct
Answers
Sole Proprietorship - ✔✔is a business owned by one person who is subject to
claims or creditors.
Partnership - ✔✔is the voluntary association of two or more people who have
combined their resources to carry on as co-owners of a lawful enterprise for
their joint profit.
Limited Partnership - ✔✔involves at least one general partner and one or more
limited partners.
Corporation - ✔✔is an artificial being, invisible, intangible, and existing only in
the contemplation of law, an entity that is something that has a distinct
existence separate and apart from the existence of its individual members.
S Corporation - ✔✔comes from the IRS Code, which permits corporations to
retain the limited-liability feature of regular corporations while being taxed as
partnerships.
Limited Liability Company - ✔✔is not a corporation but a new form of business
ownership (approved in most states since approximately 1994); combines
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©NINJANERD 2025/2026. YEAR PUBLISHED 2025.
,aspects of partnerships with limited liability of a corporation; owners known as
members.
Demand - ✔✔refers to how much (quantity) of a product or service is desired by
buyers.
Quantity Demanded - ✔✔is the amount of a product people are willing to buy
at a certain price.
Supply - ✔✔represents how much the market can offer.
Quantity Supplied - ✔✔refers to the amount of a certain good producers are
willing to supply when receiving a certain price.
Law of Demand - ✔✔if all other factors remain equal, the higher the price of a
good, the less people will demand that good. The higher the price, the lower the
quantity demanded.
Law of Supply - ✔✔demonstrates the quantities that will be sold at a certain
price. The higher the price, the higher the quantity supplied.
Equilibrium - ✔✔when supply and demand are equal.
Disequilibrium - ✔✔whenever the price or quantity are not equal.
Excess Supply - ✔✔if the price is set too high, this will be created within the
economy and cause market inefficiencies.
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©NINJANERD 2025/2026. YEAR PUBLISHED 2025.
, Excess Demand - ✔✔this is created when the price is set below the equilibrium
price.
Variable Expense - ✔✔is a cost which is uniform per unit, but fluctuates in direct
proportion to change in the related total activity or volume.
Fixed Expenses - ✔✔are a cost that, for a given period of time and range of
activity called the relevant range, doesn't change in total, but becomes
progressively smaller on a per unit basis as volume increases; these expenses do
not increase with increased business, nor do they decrease with declining
business activity.
Average Pricing - ✔✔an approach in which the total cost for a given period is
divided by quantity sold in that period to set a price, regardless of variable and
fixed costs.
Operating Ratios - ✔✔a comparison of profit and each item of expense in the
income statement expressed as a percentage of sales income; can be compared
to the industry standards in regard to measuring the possible growth of the
business.
Elasticity of Demand - ✔✔the degree in which a change in price affects the
quantity demanded.
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©NINJANERD 2025/2026. YEAR PUBLISHED 2025.
Exam Questions and Verified Correct
Answers
Sole Proprietorship - ✔✔is a business owned by one person who is subject to
claims or creditors.
Partnership - ✔✔is the voluntary association of two or more people who have
combined their resources to carry on as co-owners of a lawful enterprise for
their joint profit.
Limited Partnership - ✔✔involves at least one general partner and one or more
limited partners.
Corporation - ✔✔is an artificial being, invisible, intangible, and existing only in
the contemplation of law, an entity that is something that has a distinct
existence separate and apart from the existence of its individual members.
S Corporation - ✔✔comes from the IRS Code, which permits corporations to
retain the limited-liability feature of regular corporations while being taxed as
partnerships.
Limited Liability Company - ✔✔is not a corporation but a new form of business
ownership (approved in most states since approximately 1994); combines
1|Page
©NINJANERD 2025/2026. YEAR PUBLISHED 2025.
,aspects of partnerships with limited liability of a corporation; owners known as
members.
Demand - ✔✔refers to how much (quantity) of a product or service is desired by
buyers.
Quantity Demanded - ✔✔is the amount of a product people are willing to buy
at a certain price.
Supply - ✔✔represents how much the market can offer.
Quantity Supplied - ✔✔refers to the amount of a certain good producers are
willing to supply when receiving a certain price.
Law of Demand - ✔✔if all other factors remain equal, the higher the price of a
good, the less people will demand that good. The higher the price, the lower the
quantity demanded.
Law of Supply - ✔✔demonstrates the quantities that will be sold at a certain
price. The higher the price, the higher the quantity supplied.
Equilibrium - ✔✔when supply and demand are equal.
Disequilibrium - ✔✔whenever the price or quantity are not equal.
Excess Supply - ✔✔if the price is set too high, this will be created within the
economy and cause market inefficiencies.
2|Page
©NINJANERD 2025/2026. YEAR PUBLISHED 2025.
, Excess Demand - ✔✔this is created when the price is set below the equilibrium
price.
Variable Expense - ✔✔is a cost which is uniform per unit, but fluctuates in direct
proportion to change in the related total activity or volume.
Fixed Expenses - ✔✔are a cost that, for a given period of time and range of
activity called the relevant range, doesn't change in total, but becomes
progressively smaller on a per unit basis as volume increases; these expenses do
not increase with increased business, nor do they decrease with declining
business activity.
Average Pricing - ✔✔an approach in which the total cost for a given period is
divided by quantity sold in that period to set a price, regardless of variable and
fixed costs.
Operating Ratios - ✔✔a comparison of profit and each item of expense in the
income statement expressed as a percentage of sales income; can be compared
to the industry standards in regard to measuring the possible growth of the
business.
Elasticity of Demand - ✔✔the degree in which a change in price affects the
quantity demanded.
3|Page
©NINJANERD 2025/2026. YEAR PUBLISHED 2025.
