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Overview Guide Flashcards

7 cards from real Entrepreneurship practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Overview Guide flashcards as text

  1. What is the primary difference between a sole proprietorship and a limited liability company (LLC)?

    Answer: Sole proprietors have unlimited personal liability while LLC owners are generally protected

    In a sole proprietorship, the owner is personally responsible for all business debts, whereas an LLC protects members' personal assets from business liabilities.

  2. Which concept describes an entrepreneur's ability to identify a gap between what currently exists and what customers truly need?

    Answer: Opportunity recognition

    Opportunity recognition is the entrepreneurial process of spotting unmet needs or underserved markets that a new venture can profitably address.

  3. A startup that reinvests all profits back into growth rather than distributing them to owners is pursuing which strategy?

    Answer: Plowback strategy

    The plowback (or retention) strategy involves retaining earnings within the business to fund expansion instead of paying out dividends.

  4. What does 'product-market fit' mean for an early-stage startup?

    Answer: The product satisfies a strong market demand and customers actively want it

    Product-market fit occurs when a startup's offering resonates so well with its target customers that demand grows organically and retention is high.

  5. Which type of business structure offers pass-through taxation AND limited liability without the formality requirements of a corporation?

    Answer: LLC

    An LLC provides limited liability protection to its members while allowing profits and losses to pass through to personal tax returns, avoiding double taxation.

  6. An entrepreneur who funds her startup entirely from personal savings and early customer revenue without outside investment is practicing:

    Answer: Bootstrapping

    Bootstrapping means building and growing a business using only internal resources—personal savings, sweat equity, and revenue—without external capital.

  7. What is the purpose of a non-disclosure agreement (NDA) in entrepreneurship?

    Answer: To protect confidential business information shared with third parties

    An NDA is a legal contract that prevents the receiving party from sharing or using proprietary information disclosed during business discussions.