EEE 2023 EXAM 2 PRACTICE
QUESTIONS WITH CORRECT
ANSWERS
Pass-Through Taxation - Answer-Profits/losses are taxed on owners' personal tax
returns.
Double Taxation - Answer-Profits are taxed:
At corporate level
Again when distributed to owners
Financial Management - Answer-The process of:
raising money
managing finances
maximizing returns
Profitability - Answer-Ability of a firm to generate profit over time.
Liquidity - Answer-Ability to meet short-term financial obligations (pay bills).
Efficiency - Answer-How well a firm uses its assets to generate profit.
Stability - Answer-The firm's financial strength and consistency over time.
Income Statement - Answer-A report showing profit over a period of time.
Revenue - Answer-Money earned from sales.
Cost of Goods Sold (COGS) - Answer-Direct costs of producing goods.
Gross Profit - Answer-Revenue − COGS.
Net Profit - Answer-Final profit after all expenses.
Balance Sheet - Answer-A snapshot of:
assets
liabilities
equity
Assets - Answer-Things the company owns that have value.
, Liabilities - Answer-Debts the company owes.
Equity - Answer-Owner's share of the company (net worth).
Cash Flow Statement - Answer-Tracks cash inflows and outflows over time.
Pro-Forma Financial Statements - Answer-Financial projections based on forecasts.
Historical Financial Statements - Answer-Financial records based on past performance.
Budget - Answer-An itemized forecast of income and expenses.
Financial Ratios - Answer-Metrics used to evaluate financial performance.
Liability of Newness - Answer-The disadvantage new firms face due to:
lack of experience
lack of structure
Founder - Answer-Person who starts the business and shapes its direction.
Heterogeneous Skills - Answer-A team with diverse and complementary abilities.
Skills Profile - Answer-A chart showing:
current skills
missing skills
Employee - Answer-Works for the company long-term.
Intern - Answer-Short-term worker gaining experience.
Consultant - Answer-Expert hired to give professional advice.
Contractor (Freelancer) - Answer-Independent worker hired for specific tasks.
Board of Directors - Answer-Group that makes major company decisions (required for
corporations).
Board of Advisors - Answer-Group that provides advice only (not required).
Startup Capital - Answer-Money needed to start and run a business.
Funding Requirements - Answer-The total amount of money a startup needs to operate
until profitable.
Pro-Forma Financials - Answer-Forecasted financial statements used to estimate
funding needs.
QUESTIONS WITH CORRECT
ANSWERS
Pass-Through Taxation - Answer-Profits/losses are taxed on owners' personal tax
returns.
Double Taxation - Answer-Profits are taxed:
At corporate level
Again when distributed to owners
Financial Management - Answer-The process of:
raising money
managing finances
maximizing returns
Profitability - Answer-Ability of a firm to generate profit over time.
Liquidity - Answer-Ability to meet short-term financial obligations (pay bills).
Efficiency - Answer-How well a firm uses its assets to generate profit.
Stability - Answer-The firm's financial strength and consistency over time.
Income Statement - Answer-A report showing profit over a period of time.
Revenue - Answer-Money earned from sales.
Cost of Goods Sold (COGS) - Answer-Direct costs of producing goods.
Gross Profit - Answer-Revenue − COGS.
Net Profit - Answer-Final profit after all expenses.
Balance Sheet - Answer-A snapshot of:
assets
liabilities
equity
Assets - Answer-Things the company owns that have value.
, Liabilities - Answer-Debts the company owes.
Equity - Answer-Owner's share of the company (net worth).
Cash Flow Statement - Answer-Tracks cash inflows and outflows over time.
Pro-Forma Financial Statements - Answer-Financial projections based on forecasts.
Historical Financial Statements - Answer-Financial records based on past performance.
Budget - Answer-An itemized forecast of income and expenses.
Financial Ratios - Answer-Metrics used to evaluate financial performance.
Liability of Newness - Answer-The disadvantage new firms face due to:
lack of experience
lack of structure
Founder - Answer-Person who starts the business and shapes its direction.
Heterogeneous Skills - Answer-A team with diverse and complementary abilities.
Skills Profile - Answer-A chart showing:
current skills
missing skills
Employee - Answer-Works for the company long-term.
Intern - Answer-Short-term worker gaining experience.
Consultant - Answer-Expert hired to give professional advice.
Contractor (Freelancer) - Answer-Independent worker hired for specific tasks.
Board of Directors - Answer-Group that makes major company decisions (required for
corporations).
Board of Advisors - Answer-Group that provides advice only (not required).
Startup Capital - Answer-Money needed to start and run a business.
Funding Requirements - Answer-The total amount of money a startup needs to operate
until profitable.
Pro-Forma Financials - Answer-Forecasted financial statements used to estimate
funding needs.
