Micro-Enterprise Test 3

Question 1

the right to take possession of collateral until a debt is repaid

Answer 1

lien

Question 2

a special type of corporation where individual owners (or members) are taxed on the profits of the company, but the corporation (not the members) is liable for debts or judgements against the company

Answer 2

limited liability corporation (LLC)

Question 3

a loan that provides the borrower a maximum amount of money he/she can borrow- the borrower can then access or use that line of credit for only as much as they need at any particular time

Answer 3

line of credit

Question 4

the state agency that collects taxes

Answer 4

Louisiana Department of Revenue

Question 5

how a business communicates to larger numbers of customers, motivating them to learn more about the business and its offering. EX. advertising is a marketing tool (TV, radio, flyers)

Answer 5

marketing

Question 6

the date a loan is repaid in full

Answer 6

maturity

Question 7

a person who coaches and supports an entrepreneur or a student studying to become an entrepreneur

Answer 7

mentor

Question 8

the money a person borrows to buy real estate

Answer 8

mortgage

Question 9

an investment security that includes many different stocks purchased and held together. Investors purchase mutual funds because they are less risky than holding any individual stock

Answer 9

mutual fund

Question 10

“net” means revenue after costs

Answer 10

net income

Question 11

a payment that is owed every month

Answer 11

obligation

Question 12

debt obtained from a number of online companies. Borrowers need to disclose much less information about themselves to obtain online credit, and online credit companies make credit decisions much more quickly than banks. For those reasons, online credit is much more expensive for borrowers than bank loans

Answer 12

online credit

Question 13

when a company issues a check or makes a financial commitment for an amount greater than the amount the company has deposited in the bank. Also called a “bounced check”

Answer 13

overdraft

Question 14

costs that a business incurs that are not part of producing goods or services it sells, but which are required to operate legally and efficiently.

Answer 14

overhead

Question 15

owning an asset without any associated debt.

Answer 15

own “free and clear”

Question 16

when two or more individuals own a company. Partners are taxed on the profits of the company, and are personally liable for any debts or judgements against the company

Answer 16

partnership

Question 17

amount of money you borrowed

Answer 17

principal

Question 18

a Latin phrase (for the sake of form) that in business means a projection of future financial performance. A pro forma usually takes the form of a projection of future revenues and costs

Answer 18

pro forma

Question 19

the ability to find solutions to difficult or complex issues. The process of working through the details of a challenge or crisis- often under pressure- to reach a solution

Answer 19

problem solving

Question 20

revenues minus costs

Answer 20

profit

Question 21

unit price minus the cost of goods sold

Answer 21

profits per unit

Question 22

most projections are for a year. A “quarter” means three months. Some businesses make quarterly reports

Answer 22

quarter

Question 23

real estate is property and building(s) on it. Real estate can be a piece of land, or can be home on that piece of land, or it can be a building. Real state is typically purchased using a mortgage. The down payment can the buyer makes is called the buyer’s “equity”

Answer 23

real estate

Question 24

debt that includes a legal obligation by the borrower to repay the debt personally if the business is unable to make its scheduled debt payment. A secured debt can be guaranteed by the entrepreneur or by an credit-worthy guarantor.

Answer 24

secured debt