Jump Start Micro-Enterprise Credential: Pre-Test
(Draft: December 22, 2015)
Congratulations! You’re about to embark upon the process of attaining the Micro-Enterprise Credential. This credential
will teach you about the skills you need to be successful as a small business employee, and one day perhaps as an
entrepreneur who forms a successful new enterprise.
The objective of this pre-test is to determine how much of the material we will cover is familiar to you, and where your
teacher can focus his / her efforts to make sure you are successful.
Do not be concerned if you can’t answer a question, or maybe even a whole section of questions. That’s O.K. In fact,
that’s what your teacher should expect for most of the students taking this pre-test.
But here’s something to think about: how great will it be to compare your performance on the final test – where you
demonstrate how you’ve mastered all of the key concepts of this credential – with your answers on this pre-test?
How great will that be?
Please answer the questions below to the best of your ability, skipping questions where you don’t know the answers.
You have ______ minutes to complete this pre-test.
Your Name:
Date:
Your Teacher:
Period:
Section One: Self-Assessment / Definition of Key Terms
1) Characteristics of successful entrepreneurs include (please check all that apply):
(a)
(b)
(c)
(d)
2)
Successful entrepreneurs can be described as (please check all that apply):
(a)
(b)
(c)
(d)
3)
lone wolves
change agents
self-motivated
problem solvers
Which are entrepreneurs (please check all that apply):
(a)
(b)
(c)
(d)
4)
optimism
independence
grit
submission
a boy who starts his own lemonade stand
a woman who designs and makes her own line of clothing and sells them to her friends
a manager of the biggest chain grocery store in town
an adult who started cutting grass as a pre-teen and now runs a gardening business with a sibling
Determination can best be defined as (please check the ONE best answer):
(a)
(b)
(c)
(d)
ability to follow directions
ability to convey information accurately
commitment to get something done
the ability to interact in a friendly way
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Jump Start Micro-Enterprise Credential
Pre-Test
5)
Entrepreneurial problem solvers exhibit the following behaviors (please check all that apply):
(a)
(b)
(c)
(d)
6)
comfort performing under pressure
ability to understand the details of a problem
ability to stay focused on the big picture
loyalty to standard practices
Self-discipline can best be defined as (please check the ONE best answer):
(a)
(b)
(c)
(d)
perspective
persistence
preparation
prescription
Section Two: Business Structure and Practice
7) Advantages of establishing a new company as some type of a corporation include (please check all that apply):
(a)
(b)
(c)
(d)
8)
Government agencies that every new business must interact with include (please check all that apply):
(a)
(b)
(c)
(d)
9)
ability to raise capital from investors
guarantees the company will be profitable
ability to shield owners from liabilities of or judgments against the company
reduces paperwork the owners have to complete
Louisiana Secretary of State
Louisiana Department of Transportation
Louisiana Department of Revenue
Internal Revenue Service
Which are legal structures for a business (please check all that apply):
(a)
(b)
(c)
(d)
Interstate Corporation
Limited Liability Corporation
In-State Corporation
Partnership
10) A “registered agent” is (please check the ONE best answer):
(a)
(b)
(c)
(d)
a government official
an advertising agency representative
an individual responsible for receiving legal documents
an officer of the court
11) New companies must submit the following to the appropriate government agency (please check all that apply):
(a)
(b)
(c)
(d)
Articles of Information
Articles of Incorporation
Name Reservation
Business Plan
12) The geauxBIZ portal is (please check the ONE best answer):
(a)
(b)
(c)
(d)
a website for Louisiana Revenue to pay taxes
a website for Louisiana Secretary of State to register a company
a website for Louisiana Workforce Commission to hire employees
a joint state and federal website for filing IRS forms
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Section Three: How Companies Use Credit / Applying for Credit
13) The financial term liability refers to (please check the ONE best answer):
(a)
(b)
(c)
(d)
a weakness in the company’s financial structure
the ability of the company to raise funds
the ability of the company to secure loans
a debt or a loan a company must repay
14) Compared to a bank loan, an online loan is (please check all that apply):
(a)
(b)
(c)
(d)
much easier to obtain
less expensive (lower interest rate)
more expensive (higher interest rate)
approximately equal in terms of interest rates
15) Which factors reduce the cost of borrowing from a bank (please check the ONE best answer):
(a)
(b)
(c)
(d)
a guarantor
an outstanding mortgage
other outstanding loans
available liquid assets
16) Which are forms of debt (please check all that apply):
(a)
(b)
(c)
(d)
mortgage
commission
loan
note payable
17) The maturity of a loan is (please check the ONE best answer):
(a)
(b)
(c)
(d)
how long it takes to receive loan approval from the bank
the interest rate on the loan
the timeframe by which the borrower must repay the loan
the balance of an outstanding loan
18) A guarantor (please check all that apply):
(a)
(b)
(c)
(d)
is a credit-worthy individual or business
is responsible for repaying a loan if the debt holder cannot make a payment
assumes no legal responsibilities
has limited liquidity
Section Four: Key Financial Terms and Business Concepts
19) To determine whether a business opportunity is realistic, the entrepreneur must (please check all that apply):
(a)
(b)
(c)
(d)
determine how much capital is required to launch the business
determine the failure rate for similar businesses
determine the corporate officers of competitors
determine how many hours a week it will take to operate the business
20) The fixed costs of a business (please check all that apply):
(a)
(b)
(c)
(d)
must be different each month
include the cost of production materials
are based on the quality of goods produced
must exceed variable costs
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21) A business plan has the following purposes (please check all that apply):
(a)
(b)
(c)
(d)
explains how a product or service will address identified customer needs and/or market demands
serves as collateral that a company can take to a bank to secure guaranteed loans
describes in detail how the company’s product or service will be differentiated versus its competition
provides project cash flow scenarios
22) Which steps are part of the pre-launch research an entrepreneur should complete (please check all that apply):
(a)
(b)
(c)
(d)
detailed competitive analysis
detailed financial projections
detailed articles of organization
market research
23) Market research is a system for collecting, recording and analyzing information about (please check all that apply):
(a)
(b)
(c)
(d)
potential customers
probable competitors
product features
advertising themes
24) An employee (please check all that apply):
(a)
(b)
(c)
(d)
owns a business venture
works for someone else
takes primary financial responsibility for the risk of the business venture
is responsible for contributing equity to the business
25) What are possible advantages that a small business would have versus a larger, better-funded competitor (please
check all that apply):
(a)
(b)
(c)
(d)
larger promotion budgets
more resources to find target customers
more flexibility to satisfy customer needs
ability to change strategic direction more quickly
26) Businesses should always set their prices (please check all that apply):
(a)
(b)
(c)
(d)
lower than their competitors’ prices
high enough so that revenues exceed variable expenses
to reflect the value of their goods or services, not just their costs
higher than their competitors’ prices
27) Pricing strategies may include (please check all that apply):
(a)
(b)
(c)
(d)
maximizing units sold
maximizing revenues
discouraging competition
increasing profits
28) Advertising can be important for a new business because it (please check the ONE best answer):
(a)
(b)
(c)
(d)
is a free form of promotion
allows the new business to set up a network of distributors
communicates a differentiated message to your target customers
is a low-cost method to increase revenues
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29) Personal selling involves (please check all that apply):
(a)
(b)
(c)
(d)
identifying customer needs and concerns
thorough product knowledge
building rapport with customers
cost analysis of future product features
30) When launching a business, an important consideration is (please check all that apply):
(a)
(b)
(c)
(d)
physical or virtual location
what team members with important skills the new business can hire
how the new company’s product or service will appeal to customers
how the new company’s product or service is different from or better than competitor products or services
31) To prepare a pro forma financial projection, entrepreneurs and business leaders must consider the following
factors (please check all that apply):
(a)
(b)
(c)
(d)
Articles of Incorporation
future equipment the company may need to purchase
future unit sales and prices per unit
future labor costs
32) The financial statement that reflects a company’s financial results over the course of a quarter or a year is (please
check the ONE best answer):
(a)
(b)
(c)
(d)
Balance Sheet
Income Statement
Bank Statement
Annual Projections
33) A company balance sheet is the single report that best indicates (please check the ONE best answer):
(a)
(b)
(c)
(d)
company assets and liabilities
company quarterly cash flow
company financial projections
monthly debt payments and outstanding debt obligations
34) The following are examples of fixed costs (please check all that apply):
(a)
(b)
(c)
(d)
monthly rent
overhead salaries
cost of goods sold
hourly labor
35) The following are examples of variable costs (please check all that apply):
(a)
(b)
(c)
(d)
monthly rent
overhead salaries
cost of goods sold
hourly labor
36) A breakeven analysis can determine (please check all that apply):
(a)
(b)
(c)
(d)
how many units the company will need to sell to pay for a new piece of equipment
the identity of future loan guarantors
when a company must pay its bills to avoid bankruptcy
how many customers a new business will need to secure in order to stay solvent
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37) Which of the following factors can alter a company’s financial projections (please check all that apply):
(a)
(b)
(c)
(d)
changes in competitive advertising and promotion
a national recession
a new landlord buys the building you’re located in
supplier pricing increases
38) Revenue per unit minus cost of goods sold equals (please check the ONE best answer):
(a)
(b)
(c)
(d)
unit breakeven
contribution margin
income pro forma
debt service
39) Total revenues minus total costs equals (please check all that apply):
(a)
(b)
(c)
(d)
contribution margin
unit breakeven
profits before owner compensation and taxes
future value profits
40) The profit margin on an item a company sells can best be defined as (please check the ONE best answer):
(a)
(b)
(c)
(d)
total revenues minus total costs
profit per unit minus costs per unit
price minus cost of goods sold
total price minus total costs
41) A payment made to an insurance company to cover the costs of an insurance policy is called (please check the ONE
best answer):
(a)
(b)
(c)
(d)
a policy
a dividend
a beneficiary
a premium
42) Which are risks that a business may face (please check all that apply):
(a)
(b)
(c)
(d)
credit card fraud
supplier bankruptcy
theft by customers and employees
technological change in production methods
43) Setting prices for the items you sell (please check the ONE best answer):
(a)
(b)
(c)
(d)
should be done by accountants after analyzing each items cost structure
should be a function of the company’s costs
should balance potential profit margins and item quality with competitive pressures
should be based on what customers say they want to pay for the item
44) Capital expenditures (please check all that apply):
(a)
(b)
(c)
(d)
are reflected as cost of goods sold on an income statement
are an important factor in developing a complete cash flow statement
are reflected on a balance sheet
must be approved by the appropriate state and federal agencies
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Pre-Test
45) An entrepreneur has the responsibility to (please check all that apply):
(a)
(b)
(c)
(d)
provide accurate and timely financial statements to investors
follow applicable state and federal laws
provide employees with financial planning assistance
submit complete and accurate factual information on government filings and credit applications
Section Five: Business Ethics and Social Responsibility
46) Corporate social responsibility (please check the ONE best answer):
(a)
(b)
(c)
(d)
is the legal requirement that companies make charitable donations before paying dividends
is a government program required for all companies
are voluntary steps beyond a company’s financial self-interest that reflect what business leaders believe their
companies can or should accomplish
is a form that must be completed each year and filed with the Louisiana Secretary of State
47) A conflict of interest is (please check the ONE best answer):
(a)
(b)
(c)
(d)
when business partners have an honest disagreement about their next advertising campaign
when an accountant disagrees with the IRS on how much a company owes in income taxes
naturally occurring whenever there is competition between small businesses
a situation in which an individual might take an action to his/her advantage that would be to the disadvantage of a
person or company that believe this individual is serving them
48) Examples of intellectual property include (please check all that apply):
(a)
(b)
(c)
(d)
training test scores of a company’s employees
a copyright on written materials
a patent on an invention
a trademark on a brand name or a company logo
49) A non-disclosure agreement or NDA (please check all that apply):
(a)
(b)
(c)
(d)
is an informal promise, not a legal requirement
prevents the individuals who sign it from disclosing information shared with them
is a legal agreement
can prevent a conflict of interest by making it improper to disclose private information
50) The stakeholders of a business include (please check all that apply):
(a)
(b)
(c)
(d)
suppliers
customers
employees
local community members
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