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ESB EXAM Study Guide Questions with Correct Complete Solutions|2025/2026, Exams of Business Systems

ESB EXAM Study Guide Questions with Correct Complete Solutions|2025/2026

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2024/2025

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ESB EXAM Study Guide
The owner of a house cleaning business is seeking new customers for
his low-priced services. Which method of segmentation is the owner
using? - Behavioral
The owner of a housekeeping business wants to target customers for its
services. - Psycho-graphic- Home owners with busy lifestyles
that don't have time to clean themselves
Behavioral- Home owners who are looking for promotions and
discounts on cleaning services
Demographic- Home owners with higher incomes
Geographic- Home owners who live in neighborhoods near the business
An entrepreneur wants to purchase a fleet of food trucks to start a
mobile restaurant business. The entrepreneur is writing business plans
for the new business. Match each primary target audience with its type
of business plan - Investors: Executive summary
Investors: oral presentation
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ESB EXAM Study Guide

The owner of a house cleaning business is seeking new customers for his low-priced services. Which method of segmentation is the owner using? - ✔ ✔ Behavioral

The owner of a housekeeping business wants to target customers for its services. - ✔ ✔ Psycho-graphic- Home owners with busy lifestyles that don't have time to clean themselves

Behavioral- Home owners who are looking for promotions and discounts on cleaning services

Demographic- Home owners with higher incomes

Geographic- Home owners who live in neighborhoods near the business

An entrepreneur wants to purchase a fleet of food trucks to start a mobile restaurant business. The entrepreneur is writing business plans for the new business. Match each primary target audience with its type of business plan - ✔ ✔ Investors: Executive summary

Investors: oral presentation

Investors: Investor's business plan

Business owner: operational business plan

What is the primary drawback of a Sole Proprietorship? - ✔ ✔ Unlimited Liability

An entrepreneur wants to become the sole proprietor of a sandwich shop. Based on the estimates provided by the entrepreneur, will the bank approve her loan? - ✔ ✔ No, because her debt ratio is too high

The owner of a pet supply store wants to expand her business and by boarding animals. She has designed plans to add a 30' x 60' kennel onto the back of her retail building. - ✔ ✔ Permit

A welding shop owner rents space in a building and needs a $5,000 in supplies to complete a large project for a new customer. The bank has turned down a personal loan request. What is the most practical source of funding for the materials needed to complete this customer job? - ✔ ✔ Asking for an advance payment from the customer whose large order is the reason the materials are needed

Which are two benefits of using angel investors to help start a business? - ✔ ✔ Angels often accept a lower return on investment compared to other sources of equity capital.

Angel investors typically do not expect to be paid until the business begins making money

A business owner is applying for a loan with a bank. The bank uses a standard credit application form that asks the business owner about her personal income, bank accounts, credit cards, current balances outstanding, whether she rents or owns her house and other personal information. Which three are factors that affect credit scores? - ✔ ✔ Payment history on existing loans

Amounts owed on existing loans

Types of credit already in use by the applicant

The owner of an online retail business dropships merchandise from her wholesale suppliers directly to her retail customers. Which expense of her business is variable? - ✔ ✔ Cost of Shipping

A law is passed increasing the minimum wage from $10 to $15 per hour. A gourmet pizza restaurant is popular for obtaining its ingredients locally. Which two factors are most responsible for the price increase? - ✔ ✔ Increased raw material costs

Increased labor costs

A welder has arranged for a loan from a family member in the amount of $10,000 with an annual simple interest rate of 6%. The loan is due in 12 months. What is the amount of simple interest due at the end of the 12 month loan period? - ✔ ✔ $

The owner of a used car sales business is analyzing the cash flow for his business for the prior year. In January, the opening inventory balance of automobiles was $208,000. What is the ending inventory value? - ✔ ✔ $100,

The owner of a real estate office prepared a cash flow budget for the coming month. The beginning cash balance was $1,

Match the dollar amount to the correct line item on a cash flow budget:

  • ✔ ✔ Available cash: $6,

Cash outflow:$4,

Cash inflow:$5,

Ending cash balance:$1,

A massage therapist wants to open her own spa. She researches the prices charged at the three local competitor spas and estimates she can average $80 per customer visit. Match the correct figure to the appropriate location in the break-even formula. - ✔ ✔ A. Fixed Costs = $245,

B. Average Price = $

C. Variable Cost = $3.

D. Break Even Point in units = 3,

A farmer providing custom farming and tractor services averages averages $1,000 per day in revenue with a gross profit margin of $40. How many prospects should the farmer have in their active clients listing at all times at a minimum? - ✔ ✔ 20

The owner of a car detailing business wants to develop a reputation for customer service. The owner is developing policies and procedures to guide the staff in this effort. Which documented procedure covers the area of customer service? - ✔ ✔ Customer Complaints

Service

Which is one of the greatest risks of entrepreneurship? - ✔ ✔ Loss of money

A photographer enjoys traveling and having freedom over her own schedule. She would like to turn her photography hobby into a business. Which are the two greatest benefits she might experience by turning her hobby into a successful business? - ✔ ✔ Making her own rules

Satisfaction

What is a primary drawback of starting a new business without purchasing a franchise or buying an existing business? - ✔ ✔ Greater chance the business will fail

Which two are advantages of buying a franchise? - ✔ ✔ Branding

Marketing assistance

An entrepreneur wants to own a flower shop and researching the business options available.

When 100 potential customers were surveyed, they provided the following responses:

Which opportunity for starting a florist business would have the highest probability of success? - ✔ ✔ Buy an existing florist business and enhance it so customers have the option to also place orders online

A photographer wants to turn her hobby into a business. She is researching the business options available. When 100 potential customers were surveyed, they provided the following responses:

Which opportunity for starting a photography business would have the highest probability? - ✔ ✔ Setup a studio with a gallery of sample photography

A home remodeling business wants to identify customer segments to target its services. Match each method of segmentation to its potential customers. - ✔ ✔ Geographic- Setup a studio with a gallery of sample photography

Behavioral- Homeowners who respond to promotional discounts

Demographic- Homeowners with higher incomes

Psychographic- Homeowners who like modern decor and conveniences

A SCUBA instructor is interested in opening a dive tour business. She is preparing a presentation to a group of potential investors that will include a value proposition. Of the options below, which three should be included in the value proposition? - ✔ ✔ Overview of the business

what services will be offered

how the business differs from the competitors

Which three C's must be addressed in all types of business plans? - ✔ ✔ Concept

Customers

Line of Credit- a loan to purchase now and pay later

A chef is interested in opening a restaurant in a nearby town. He wants to learn more about possible competitors. Where should the chef go to obtain a list of restaurants in the nearby town? - ✔ ✔ Local Chamber of Commerce

An auto mechanic opens a business in a community that has a history of auto repair shops delivering poor quality workmanship. How can the new auto mechanic regain the trust of local customers? - ✔ ✔ Advertise a free 90-day warranty on all repairs

The owner of a small successful hardware store has died and left the business to his children. None of his children want to operate the business. They decide to sell. The business has a book value of $876,400 and annual earnings of $1,050,600. Four companies have made offers to buy the hardware store. Which is the better offer? - ✔ ✔ Company C has offered to pay three times the book value

A non-profit organization wants to hire a Director. The organization has been operating for only a year and is growing fast. The newly created Director position will responsible for all aspects of operating the entire organization, so the founders want to hire a candidate with at least 10 years experience. Which factor could prevent the hire? - ✔ ✔ Whether the non-profit organization can afford the salary to attract a qualified candidate

A real estate broker employs 10 real estate agents. The broker provides offices, administrative support, and marketing for her agents. Which of the following should outsourced? - ✔ ✔ Internet services

A fitness trainer provides her services to clients as a sole proprietorship. What are the tax implications for this structure? - ✔ ✔ Income earned by a sole proprietorship passes to one owner to be taxed

An entrepreneur invents a new kind of ice cream scoop that is heated in a microwave oven to make scooping ice cream easier. What should the entrepreneur do to protect the invention? - ✔ ✔ Apply for a patent on the ice cream scoop

The owner of a rapidly growing landscaping business is finding the workload increasingly difficult to manage projects, acquire clients, supervise employees, keep records and pay bills. What business is being implemented in this example? - ✔ ✔ Separation of Duties

The owner of a gourmet chocolate shop creates treats that have unique flavors derived from cocoa grown only in specific regions of the world. On which segment of the supply chain should the owner focus? - ✔ ✔ Between the gourmet chocolate shop and the base chocolate suppliers

A new dog grooming business is setting milestones that will determine if it is successful or not. The owner has decided the business will be considered successful when it starts to make a profit. Which milestone will measure profitability? - ✔ ✔ When revenue exceeds the break- even point

marketing to attract customers to his new business? - ✔ ✔ Lower Prices

Which is one of the greatest benefits of entrepreneurship? - ✔ ✔ Being your own boss

Which are three risks of entrepreneurship? - ✔ ✔ Long hours, potential business failure, financial insecurity

Gabe has worked as a journeyman electrician for an employer for the past 16 years. He is paid a good salary. His only dissatisfaction is the hours are long and often when he requests time off he is denied because of customer workload.

Which benefit of entrepreneurship will Gabe most enjoy? - ✔ ✔ Autonomy

What is a primary benefit of starting a new business without purchasing a franchise or buying an existing business? - ✔ ✔ Developing your own rules

A mechanic just graduated from motorcycle repair school and wants to start a business because there is a lack of motorcycle repair shops in the local town. Given the facts provided, which opportunity would be the best choice for the motorcycle mechanic to open a business? - ✔ ✔ Start a new business and invest $50,000 in modern diagnostic tools.

An entrepreneur who has a hobby in leathercraft wants to turn it into a business. She wants to sell purses, belts, and other leathercrafts from her home. Which opportunity for starting a leathercraft business would

have the highest probability of success? - ✔ ✔ Build an online storefront

Based upon the education and skills gained from the years of vocational training as an auto mechanic, as well as having grown up in a family of entrepreneurs, a young adult decides to open an auto mechanic shop. Which customer group will this new auto mechanic business support? - ✔ ✔ Businesses

The owner of a pizza delivery business is seeking new customers. The owner has identified a group of potential customers that have moved into some new housing within reaches of his drivers. Which method of segmentation is the owner using? - ✔ ✔ Geographic

A child daycare center needs to identify a value of proposition that will help parents feel secure about using their services. Which two initiatives meets this objective? - ✔ ✔ Providing live web cams parents can access from the Internet by using a secure logon. Offering a list of references from other parents

The owner of a pet daycare is presenting a plan to investors to expand the facility and promises the center will meet the needs of customers with a variety of schedules. What is a legitimate value proposition for potential customers? - ✔ ✔ Providing extended hours to pickup and drop off pets before and after work

Which two groups benefit most from a well-written business plan? - ✔ ✔ Business owner

Investors

An individual starts a babysitting business with a loan of $1000. The loan is for 2 years at a 5% COMPOUND interest rate. How much will the individual owe by the end of the loan assuming nothing is paid until the end of the 2 years term. - ✔ ✔ $1,102.

A carpenter wants to start his own business building custom cabinets. Unfortunately, he has no business training and needs assistance writing a business plan, finding funding, and obtaining general advice. Which agency should the carpenter utilize? - ✔ ✔ SBA

A software development consultant works with several clients. Some of the clients are competitors. What is a consequence if the consultant violates confidentiality by discussing a client's project with another client? - ✔ ✔ Loss of clients and possible lawsuit

Exchanging ownership for cash, either by acquisition or merger - ✔ ✔ Harvesting

Transferring ownership to people who already operate the business - ✔ ✔ Management Buyout

A business owner sells ownership to a retirement fund for the employees - ✔ ✔ Employee Stock Ownership Plan (ESOP)

Dividing ownership of a privately held company into shares sold to the public - ✔ ✔ Initial Public Offering (IPO)

The owner of a popular seafood restaurant needs to hire a new chef - ✔ ✔ 1. Identify the skills required of the new chef

  1. Write the job description, including minimum and desired requirements
  1. Post an ad in places most likely to be viewed by qualified candidates
  2. Accept and review applications to assess the most qualified candidate

A successful software trainer has decided to open a corporate training business. The software trainer is putting together an organizational chair and assessing what job roles will be needed. What are some of the expected roles of those employees on the highest level of the organizational chart? - ✔ ✔ Developing succession plans and building a board of advisors

An interior designer has learned the she must pay-self employment tax on her individual earnings. Which type of legal structure must pay self- employment tax? - ✔ ✔ Sole proprietorship

An entrepreneur was building a website for a new dog grooming business. Through internet searches, the entrepreneur found many pictures to use on the new business's website. Which type of intellectual property protection is at issue in this example? - ✔ ✔ Copyright

An entrepreneur notices new demand for products featuring characters from a recent movie. The entrepreneur finds a manufacturer of kitchen products featuring these character. Based on the scenario provided, what should be a primary concern of this entrepreneur? - ✔ ✔ Reliability of supply

A family owns a tractor sales and supply store. Over the past decade sales of large tractors and implements have decreased as many of the old farms in the community have sold and been subdivided into smaller residential hobby farms. Given the facts provided, which action would

figure to correct location in the Income Statement worksheet. - ✔ ✔ A.$45,

B.$18,

C.$26,

D.$9,

A fitness trainer in a neighborhood is trying to add new consumers who have recently moved into the neighborhood. What is effective for attracting new customers? - ✔ ✔ Promotional Discount

Match each cost or expense with the proper category of an income statement. - ✔ ✔ Operating expense- advertising

Operating expense- insurance

cost of goods sold- labor

cost of goods sold-materials

operating expense- rent

revenue- sales

The owner of Quality Electrical is analyzing financial parts of the Income statement including Net Sales, Total Cost of Goods Sold, Gross Profit, Total expenses, Pre-Tax Profit and Net Profit. Match each figure to the correct calculation in the income statement worksheet - ✔ ✔ A. - $85,

B. -$18,

C. -$42,

D. - $27,

The owner of a new automobile sales lot is applying for two loans at the bank. Why would the bank be more inclined to approve the first loan but not the second? - ✔ ✔ The inventory loan would have the automobiles as collateral, but the operating loan has no collateral

A carpenter builds and remodels residential decks. Classify the carpenter's cost according to how each cost acts in connection with the number of decks built and remodeled. - ✔ ✔ Variable cost- Building permits paid by the carpenter for new and remodeled decks

Fixed cost- Professional license fee to sit for the state builders' exam

Variable Cost- Travel to the residences of customers to build and remodel decks

Variable Cost- Woods for building and remodeling decks

An independent gas station sits besides a busy highway. Half of its customers are travelers passing through the area. Why would the gas station charge more for purchases made with a credit card? - ✔ ✔ To offset processing fees charged by the credit card companies

A beekeeper is analyzing the cash flow for his business for the prior year. What was the ending inventory value? - ✔ ✔ $6,