Mid-Term Study Guide

Question 1

What are the FIVE key drivers of any business?

Answer 1

Cash, Assets, Profit, People, Growth

Question 2

Money that can be accessed easily and immediately is called what?

Answer 2

Liquidity

Question 3

A businesses _____ refers to how much cash the company currently has available.

Answer 3

Cash Position

Question 4

____ is the difference between how much you make by selling goods and services and how much it costs to produce and sell them.

Answer 4

Profit

Question 5

_____ is the difference between the revenues you generate and the expenses incurred to create them.

Answer 5

Profit

Question 6

Cash In - Cash Out = _______

Answer 6

Cash Generated

Question 7

What are three examples of a business’s assets?

Answer 7

Inventory, Employees, Property

Question 8

The return or benefit of an asset divided by its cost is called what?

Answer 8

Return on Investment (ROI)

Question 9

Return or Benefit / Investments or Cost = ______

Answer 9

Return on Investment (ROI)

Question 10

Total revenue and net income can be found on a company’s _______.

Answer 10

Income Statement

Question 11

What is an example of inorganic growth?

Answer 11

Mergers or Acquisitions

Question 12

What is an example of organic growth?

Answer 12

Any internal growth: Hire/train new employees, open new location, introduce new products/services

Question 13

What are a business’s primary source of revenue and cash flow?

Answer 13

Clients

Question 14

This type of business can use their social security number as their FEIN.

Answer 14

Sole Proprietorship

Question 15

What type of business has “members” instead of owners?

Answer 15

Limited Liability Company (LLC)

Question 16

True or False: A Mutual Fund is a pool of moneys collected from many investors.

Answer 16

True

Question 17

What type of IRA is most recommended for tax benefits?

Answer 17

(CORRECT ANSWER) Roth: Contributions are taxes now (while in lower tax bracket) and distributions are tax free.

—————

Traditional: Contributions are tax deductible but distributions are taxed as income.

Question 18

What are three ways companies get and use cash?

Answer 18

Operating Activities
Investing Activities
Financing Activities

Question 19

True or False: The Cash Flow of a business describes how much cash it will generate and spend?

Answer 19

True

Question 20

Give two examples that CFSB Investments can offer a client to GROW their money.

Answer 20

Mutual Funds and Annuities

Question 21

List the FIVE aces.

Answer 21

Pains
Economics
Competition
Decision
Commitment

Question 22

What ace might include this question: “If we do “BLANK” that we’ve spoken about today, on a scale of 1-10, what is the likeliness of this relationship continuing?”

Answer 22

Commitment

Question 23

True or False: When delivering a USP in the aces process, you should first say “Let me tell you about our USP…”

Answer 23

False

Question 24

What is the difference between an S-Corp and a C-Corp?

Answer 24

C-Corps have double taxation whereas S-Corps do not

Question 25

In the sales process, what does it mean to "Recognize and Respond"?

Answer 25

Identify stalls (reasons why the client can't commit) then transition to more conversation and a USP.

Question 26

The cash flow statement basic equation is:

Answer 26

Cash from/used in operating activities + cash from/used in investing activities + cash from/used in financing activities = net change in cash

Question 27

The statement of cash flows measures what?

Answer 27

Cash Generation

Question 28

The Balance Sheet formula is:

Answer 28

Assets = Liabilities + Equity

Question 29

The Income Statement measures _____.

Answer 29

Profitability

Question 30

Net Income / Shares of Common Stock = ?

Answer 30

Earnings Per Share (EPS)

Question 31

What are a company's most important resource?

Answer 31

People: Employees and customers are two important stakeholders to any business.

Question 32

What ace might include this question: "Who are the key players? What's important to them? Who's against this?"

Answer 32

Decision

Question 33

Which ace might include this question: "Who else is in your industry?"

Answer 33

Competition

Question 34

Pre-Call Planning includes collection what?

Answer 34

``` Basic Contact Info: Business Name, Phone #, Email, Website Objective of the Call: Type of Business: Owner's Name: Gatekeepers? General Research on prospect Competitors and what sets them apart ```

Question 35

List the five basic types of business entities.

Answer 35

``` Sole Proprietorship Partnership C-Corp S-Corp Limited Liability Company (LLC) ```

Question 36

What are the advantages of a Sole Proprietorship?

Answer 36

Easy to form, operate and terminate | Simple taxation

Question 37

What are the disadvantages of a Sole Proprietorship?

Answer 37

Unlimited liability for company debts and liabilities | Lack of continuity - when owner dies so does company

Question 38

What are the advantages of a Partnership?

Answer 38

Easy to form | Simple taxation

Question 39

What are the disadvantages of a Partnership?

Answer 39

Unlimited liability | Lack on continuity if a partner leaves

Question 40

What are the advantages of a C-Corp?

Answer 40

Limited liability of shareholders, Perpetual life, Ease of stock transfer

Question 41

What are the disadvantages of a C-Corp?

Answer 41

More difficult to form Double taxation Potentially subject to accumulated earnings tax & AMT

Question 42

What are the advantages of a S-Corp?

Answer 42

Simple taxation method, Limited liability for shareholders, Perpetual life

Question 43

What are the disadvantages of a S-Corp?

Answer 43

``` Limited number (100) of shareholders, Only one class of stock, Shareholders must be individuals/estates/certain trusts ```

Question 44

What are the advantages of a LLC?

Answer 44

No taxation at entity level, Limited liability of owners (members), Lack of ownership restrictions

Question 45

What are the disadvantages of a LLC?

Answer 45

No tax advantaged employee benefit plans, | All member income subject to employment taxes

Question 46

What are the two types of accounting methods:

Answer 46

Accrual Basis | Cash Basis

Question 47

Explain the Accrual Basis accounting method.

Answer 47

Recognizes revenues when earned and expenses when incurred.

Question 48

Explain the Cash Basis accounting method.

Answer 48

Recognizes revenues when payment is received and expenses when payment is made.

Question 49

List the Five Types of Company Financial Statements in order of costliness.

Answer 49

``` Company prepared - ₵ Tax Returns - $ Compiled - $ Reviewed - $$ Audited - $$$ ```

Question 50

What does "EBITDA" stand for?

Answer 50

Earnings before interest expense, income taxes, bad debt expense, depreciation and amortization

Question 51

USP stands for Unique Selling ________.

Answer 51

Proposition

Question 52

What does REIT stand for?

Answer 52

Real Estate Investment Trust

Question 53

When speaking to a client or prospect, asking them questions can help us uncover ________.

Answer 53

Pains

Question 54

After you have "planned" for a call, you should always do this before your meeting:

Answer 54

Ask for permission to speak with them/take some time via phone or in person conversation

Question 55

What is the 1031 Exchange?

Answer 55

The swap of one investment property for another