Accounting
One classroom-friendly example of an asset
Resource owned by business with probable future benefit
Name three common forms of business ownership from the list and give one sentence describing each
Sole proprietorship — single owner, unlimited personal liability.
Partnership — two or more owners sharing profits and responsibilities.
Corporation — separate legal entity, limited liability for shareholders.
Define "expense" and give one example of a fixed expense.
Cost incurred to earn revenue
Define "product" and "place" in the marketing mix (the 4 Ps) in one sentence each.
The good or service offered to meet customer needs.
Where product is sold or how it is delivered to the customer.
A balance sheet has what two main sections?
financial statement showing assets and claims on assets (liabilities and equity)
What is an LLC and one advantage it offers owners compared to a sole proprietorship?
Limited Liability Company; advantage = limited personal liability while allowing pass-through taxation.
What is interest and how does it affect loan repayment?
Cost of borrowing, typically a percentage of unpaid principal; increases total amount repaid.
What is a target market and name two kinds of information are included when describing demographics and psychographics?
Measurable traits (age, income, gender).
Attitudes, values, lifestyle.
The difference between a current asset and a noncurrent asset and give one example of each.
expected to convert to cash within one year and used for longer than one year
Compare a partnership and a corporation in terms of liability for owners
Partnership owners (depending on type) often have personal liability; corporation shareholders have limited liability.
Define "net income" and write a simple formula using revenue and expenses.
Revenue − Expenses, written as Net Income=Revenue−Expenses.
Give one example each of a direct competitor and an indirect competitor for a local coffee shop.
Another nearby café selling similar coffee.
A home-brew coffee brand or quick-serve bakery offering beverages.
Describe what depreciation is and what formula is used to calculate it
systematic allocation of an asset's cost over its useful life; recorded so income reflects usage; Total cost of item - salvage value / years of life
Explain how a sole proprietorship might have different personal/HR risk than a corporation
Sole proprietor often personally liable for debts and HR issues; corporation separates personal assets from business, reducing personal exposure.
Explain "principal" in the context of a loan and how paying more than interest affects the principal balance.
Original loan amount remaining; paying more than interest reduces principal balance, lowering future interest.
Explain "psychological pricing" and give a brief example a store might use.
Pricing that influences perception
Using $4.99 instead of $5.00
A company lists $50,000 in current liabilities and $120,000 in noncurrent liabilities. If assets equal $300,000, calculate the company's equity (net worth). Show your work.
Assets - Liabilities = Net Worth
130,000
What are the different types of risks and a way to mitigate one
Loan initially increases cash (asset) and increases liabilities (loan payable). Short-term portion is current liability; remaining is noncurrent liability. Interest expense reduces net income over time.
A company has revenue of $250,000 and expenses of $190,000. Calculate net income and explain how net income affects equity on the balance sheet.
$60,000. Net income increases retained earnings (equity) on balance sheet.
Compare "cost-plus pricing" and "value-based pricing" and give one business situation where "bundle pricing" would be appropriate.
Cost-plus pricing = price = cost + markup. Value-based pricing = price based on perceived customer value.
Bundle pricing useful when selling complementary items (e.g., lunch combo).