PRAXIS 5101 Study Questions With
Correct Answers Latest Update
2026
1. Entrepreneur - ANSWER A person who organizes, manages, and takes on
the risks of a business.
2. Entrepreneurship and Economy - ANSWER Entrepreneurs serve as drivers
of innovation. They serve a role of job creators. They serve niche markets.
Though they can be small in scale they are important contributors to the
economy.
3. Creation of Entrepreneurs - ANSWER Entrepreneurs often exist to fill niche
consumer needs. They can be created by technological advancements,
making it easier for them to fulfill a need. Other production changes and
social factors may influence the creation of entrepreneurial endeavors.
4. Established Entrepreneurs - ANSWER This is an entrepreneurial business
that has established a consumer base and may be relatively successful
5. Entrepreneurial Ventures - ANSWER These are newer and often small
entrepreneurial business that still face many challenges before success. They
face high amount of risk, but many entrepreneurs do succeed.
6. Business Competition - ANSWER Thought it is risky for a smaller venture
to compete with a larger established firm. It is possible. Smaller business
may be able to differentiate and personalize products or services, social
, media can help them compete for free, personalized offers or discounts.
Consumers may really appreciate the niche "boutique" experience.
7. Qualities of Successful Entrepreneurs - ANSWER Leadership, interpersonal
skills, motivation and enthusiasm, hard working, organized, planning,
flexible, thorough, meticulous, persistent, risk takers and visionaries.
8. Benefits of Entrepreneurship - ANSWER Own boss, working from home,
income potential.
9. Negatives of Entrepreneurship - ANSWER Liability, risky, cost of start up,
high failure rates, requires extensive support net
10.Benefits of Home Business - ANSWER Easy (thanks internet), comfortable,
cost savings (low overhead), tax deductions.
11.Drawbacks of Home Business - ANSWER Difficult to concentrate, may
appear unprofessional, storage space, commercial business may not be
allowed at residence
12.Sole Proprietorship - ANSWER A business owned and managed by a single
individual. Personal liability.
13.Taxes are combined with owners income.
14.Benefits of Proprietorship - ANSWER Control, no corporate tax, no legal
costs, less complicated, profit potential
,15.Drawbacks of Proprietorship - ANSWER Liability, potential of loss,
challenging, harder to gain investors
16.Partnerships - ANSWER Two or more individuals band together to form a
business in which they share profits, work, liabilities and other business
components.
17.Taxes are under the business name, income returns, excise taxes and
employment taxes.
18.Joint Ventures - ANSWER Like a partnership, but temporary
19.Limited Partnership - ANSWER Partnership in which there is limited
control but limited liability too. Profits are different and taxation differs.
20.Benefits of Partnership - ANSWER Partners offer different skills and
qualities, less burden on one (usually), shared cost and liability, easy to
form.
21.Drawbacks of Partnership - ANSWER Partners can disagree, still have
liability of the business, one partner can affect the other, sharing profits
22.Corporations - ANSWER It is considered a legal entity, owned by
shareholders, liabilities and debts are owned by the corporation. Ability to
raise money through sale of stock. Very complex to form. Usually larger
business.
23.Benefits of Corporations - ANSWER Shareholder protection, issuing
stocks, corporate tax benefits, access to "better" employees.
, 24.Disadvantages of Corporations - ANSWER Higher start up cost, more
paperwork, double taxation potential
25.S Corporation (S Corp) - ANSWER A tax-reporting entity that allows
certain corporations with 100 or fewer stockholders to choose to be taxed as
partnerships. Its stockholders receive the organizational benefits of a
corporation and the tax advantages of a partnership.
26.Limited Liability Company (LLC) - ANSWER A hybrid form of business
enterprise that offers the limited liability of the corporation but the tax
advantages of a partnership.
27.Franchise - ANSWER A business established or operated under an
authorization to sell or distribute a company's goods or services in a
particular area
28.Benefit of Franchise - ANSWER Support net, built in consumer base
29.Disadvantage of Franchise - ANSWER Start up cost, profits go to franchise
owner (some), Limited control of decisions
30.Variation of Taxation Between Business Ownership Types - ANSWER
Sole proprietors, file with business and personal income together.
Partnerships, similar to SP but divided between partners. Corporations, taxed
as a business and then individual income is taxed, meaning any dividends
paid are taxed again.
31.Small Business Start Up - ANSWER Develop a business plan, description
of offering, who is involved, target market, pricing, promotions, financial
Correct Answers Latest Update
2026
1. Entrepreneur - ANSWER A person who organizes, manages, and takes on
the risks of a business.
2. Entrepreneurship and Economy - ANSWER Entrepreneurs serve as drivers
of innovation. They serve a role of job creators. They serve niche markets.
Though they can be small in scale they are important contributors to the
economy.
3. Creation of Entrepreneurs - ANSWER Entrepreneurs often exist to fill niche
consumer needs. They can be created by technological advancements,
making it easier for them to fulfill a need. Other production changes and
social factors may influence the creation of entrepreneurial endeavors.
4. Established Entrepreneurs - ANSWER This is an entrepreneurial business
that has established a consumer base and may be relatively successful
5. Entrepreneurial Ventures - ANSWER These are newer and often small
entrepreneurial business that still face many challenges before success. They
face high amount of risk, but many entrepreneurs do succeed.
6. Business Competition - ANSWER Thought it is risky for a smaller venture
to compete with a larger established firm. It is possible. Smaller business
may be able to differentiate and personalize products or services, social
, media can help them compete for free, personalized offers or discounts.
Consumers may really appreciate the niche "boutique" experience.
7. Qualities of Successful Entrepreneurs - ANSWER Leadership, interpersonal
skills, motivation and enthusiasm, hard working, organized, planning,
flexible, thorough, meticulous, persistent, risk takers and visionaries.
8. Benefits of Entrepreneurship - ANSWER Own boss, working from home,
income potential.
9. Negatives of Entrepreneurship - ANSWER Liability, risky, cost of start up,
high failure rates, requires extensive support net
10.Benefits of Home Business - ANSWER Easy (thanks internet), comfortable,
cost savings (low overhead), tax deductions.
11.Drawbacks of Home Business - ANSWER Difficult to concentrate, may
appear unprofessional, storage space, commercial business may not be
allowed at residence
12.Sole Proprietorship - ANSWER A business owned and managed by a single
individual. Personal liability.
13.Taxes are combined with owners income.
14.Benefits of Proprietorship - ANSWER Control, no corporate tax, no legal
costs, less complicated, profit potential
,15.Drawbacks of Proprietorship - ANSWER Liability, potential of loss,
challenging, harder to gain investors
16.Partnerships - ANSWER Two or more individuals band together to form a
business in which they share profits, work, liabilities and other business
components.
17.Taxes are under the business name, income returns, excise taxes and
employment taxes.
18.Joint Ventures - ANSWER Like a partnership, but temporary
19.Limited Partnership - ANSWER Partnership in which there is limited
control but limited liability too. Profits are different and taxation differs.
20.Benefits of Partnership - ANSWER Partners offer different skills and
qualities, less burden on one (usually), shared cost and liability, easy to
form.
21.Drawbacks of Partnership - ANSWER Partners can disagree, still have
liability of the business, one partner can affect the other, sharing profits
22.Corporations - ANSWER It is considered a legal entity, owned by
shareholders, liabilities and debts are owned by the corporation. Ability to
raise money through sale of stock. Very complex to form. Usually larger
business.
23.Benefits of Corporations - ANSWER Shareholder protection, issuing
stocks, corporate tax benefits, access to "better" employees.
, 24.Disadvantages of Corporations - ANSWER Higher start up cost, more
paperwork, double taxation potential
25.S Corporation (S Corp) - ANSWER A tax-reporting entity that allows
certain corporations with 100 or fewer stockholders to choose to be taxed as
partnerships. Its stockholders receive the organizational benefits of a
corporation and the tax advantages of a partnership.
26.Limited Liability Company (LLC) - ANSWER A hybrid form of business
enterprise that offers the limited liability of the corporation but the tax
advantages of a partnership.
27.Franchise - ANSWER A business established or operated under an
authorization to sell or distribute a company's goods or services in a
particular area
28.Benefit of Franchise - ANSWER Support net, built in consumer base
29.Disadvantage of Franchise - ANSWER Start up cost, profits go to franchise
owner (some), Limited control of decisions
30.Variation of Taxation Between Business Ownership Types - ANSWER
Sole proprietors, file with business and personal income together.
Partnerships, similar to SP but divided between partners. Corporations, taxed
as a business and then individual income is taxed, meaning any dividends
paid are taxed again.
31.Small Business Start Up - ANSWER Develop a business plan, description
of offering, who is involved, target market, pricing, promotions, financial
