Chapter 3: Business Basics Flashcards
The central company document that the owner and employees use to make decisions is a
Business plan
The three basic elements of a personal financial statement are
Assets, liabilities, and net worth
On a personal financial statement, all the money owed is called
Liabilities
Assets minus liabilities equals
Net worth
A business owned by one person who is in complete control is called a
Sole proprietorship
A business owned by two or more persons is a
Partnership
Which type of business is owned by shareholders
Corporation
A financial advisor who sets up a basic bookkeeping system and reviews rental agreements is a(n)
Accountant
An advisor on borrowing money, signing rental agreements, and assuming tax responsibilities is a(n)
Lawyer
Which of the following experts acts as a link between the manufacturer and the skin care center
Distributor
The most important factor in opening a skin care business is
Location
Which of the following is the first step in gauging the market need?
A) obtaining a 10-year forecast of the economic future
B) finding out what services other skin care centers offer
C) finding out what type of potential clientele are in the area
D) determining how many skin care centers are in the area
D) determining how many skin care centers are in the area
Which of the following measurements per Esthetician allows for an efficient working space? A) 50 to 60 square feet B) 70 to 80 square feet C) 90 to 100 square feet D) 120 to 150 square feet
D) 120 to 150 square feet
The reservoir of cash that is needed to stay ahead of creditors is called
Operating capital
A reserve of cash that you can draw upon to meet operating expenses if you have a slow month or two is called
Line of credit
Which type of rent allows owners to predict monthly expenses carefully
Fixed rent
A set dollar amount paid per month plus a percentage of the total monthly income is called
Variable rent
Insurance is a type of
Risk management
Which type of insurance covers the cost of a lawsuit or settlement resulting rom damage inflicted on a client during an service?
Malpractice
An insurance policy that covers the actual skin care center equipment and physical location is known as
Property
Which of the following insurance policies is required by law
Worker’s compensation
All payments received from a client for services performed and home care products purchased are referred to as
Income
All cost incurred in the day-to-day running of the skin care center are called the
Operating expenses
Utilities, supplies, cost of promotions, postage, and taxes are types of
Variable costs
