DECA Entrepreneurship 2 — Questions and Answers
Question 1: Which financial statement shows a business's revenues and expenses over a specific period?
- Balance sheet
- Income statement (Correct answer)
- Cash flow statement
- Statement of retained earnings
Correct answer: Income statement
The income statement (profit and loss statement) reports revenues and expenses over a defined accounting period.
Question 2: An entrepreneur's 'value proposition' refers to:
- The price charged for a product
- The unique benefit a product provides to customers (Correct answer)
- The total value of company assets
- The entrepreneur's personal net worth
Correct answer: The unique benefit a product provides to customers
A value proposition articulates why customers should choose your product by explaining the unique benefits it delivers.
Question 3: Which pricing strategy sets a high initial price and lowers it over time?
- Penetration pricing
- Cost-plus pricing
- Price skimming (Correct answer)
- Competitive pricing
Correct answer: Price skimming
Price skimming targets early adopters willing to pay premium prices, then reduces the price to attract more price-sensitive customers.
Question 4: What does 'accounts receivable' represent on a balance sheet?
- Money owed to suppliers
- Money customers owe the business (Correct answer)
- The business owner's equity
- Long-term debt obligations
Correct answer: Money customers owe the business
Accounts receivable is money that customers owe the business for goods or services already delivered but not yet paid for.
Question 5: A SWOT analysis examines Strengths, Weaknesses, Opportunities, and:
- Targets
- Threats (Correct answer)
- Transactions
- Trends
Correct answer: Threats
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats — a framework for strategic business analysis.
Question 6: Which business structure offers the MOST personal liability protection to its owners?
- Sole proprietorship
- General partnership
- Corporation (Correct answer)
- Joint venture
Correct answer: Corporation
A corporation is a separate legal entity, so shareholders' personal assets are generally protected from business liabilities.
Question 7: Bootstrapping a startup means:
- Borrowing heavily from banks
- Funding the business using personal savings and revenue (Correct answer)
- Raising money through an IPO
- Seeking venture capital investment
Correct answer: Funding the business using personal savings and revenue
Bootstrapping involves self-funding a business through personal savings, revenue reinvestment, and minimal outside capital.
DECA Entrepreneurship 2
Which financial statement shows a business's revenues and expenses over a specific period?