Entrepreneurship Finance Fundamentals
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Questions and Answers

What is the main difference between fixed costs and variable costs?

  • Fixed costs are only applicable to large businesses, while variable costs are applicable to small businesses
  • Fixed costs stay consistent from month to month, while variable costs fluctuate based on units of production (correct)
  • Fixed costs are always higher than variable costs
  • Fixed costs are paid annually, while variable costs are paid quarterly

    • What does working capital represent in a company?

  • The company's market value
  • The company's cash reserves
  • The company's credit score
  • The company's ability to pay its current liabilities with its current assets (correct)

    • What is the primary advantage of crowdfunding as a funding source?

  • It provides access to a large amount of capital at once
  • It is a type of debt financing with low interest rates
  • It relies on receiving small contributions from many supporters (correct)
  • It allows entrepreneurs to maintain full ownership and control

    • What is the main difference between debt financing and equity financing?

    <p>Debt financing requires repayment with interest, while equity financing does not</p> Signup and view all the answers

    What is the purpose of a small business loan?

    <p>To give entrepreneurs access to capital for various business purposes</p> Signup and view all the answers

    What is the profit formula?

    <p>Revenue - Cost = Profit</p> Signup and view all the answers

    What is the primary purpose of a profit and loss statement?

    <p>To summarize the revenues, costs, and expenses incurred during a specified period</p> Signup and view all the answers

    What is the main goal of creating a financial statement?

    <p>To forecast sales and budget for a business</p> Signup and view all the answers

    What is the primary purpose of the Lean Canvas model?

    <p>To identify the revenue streams of a business</p> Signup and view all the answers

    What is the main goal of bootstrapping?

    <p>To use personal finances or operating revenue to fund a business</p> Signup and view all the answers

    What is the purpose of pitching in the fundraising process?

    <p>To seek funding from external sources</p> Signup and view all the answers

    What is the main purpose of a balance sheet?

    <p>To cover revenue and expenses for a period of time</p> Signup and view all the answers

    What is the primary focus of demographic market segmentation?

    <p>Personal characteristics such as age, gender, and income level</p> Signup and view all the answers

    Which of the following is NOT a component of the Lean Canvas model?

    <p>Marketing Strategies</p> Signup and view all the answers

    What is the primary purpose of market research in entrepreneurship?

    <p>To understand customer needs and preferences</p> Signup and view all the answers

    What type of market segmentation involves grouping people based on their lifestyles and shared attitudes?

    <p>Psychographic segmentation</p> Signup and view all the answers

    Why is it important for entrepreneurs to have a strong online presence?

    <p>To increase brand visibility</p> Signup and view all the answers

    What is the primary focus of financial planning in entrepreneurship?

    <p>Making business decisions using financial concepts and tools</p> Signup and view all the answers

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