Entrepreneurship and Small Business (ESB) Certification Practice Exam

Which of the following items would qualify as a start-up cost?

1. Gas

2. Cooking utensils

3. Truck lease payments

4. Employee salaries

The correct answer is: Cooking utensils

The selection of cooking utensils as a start-up cost is appropriate because these items are essential for establishing a new business, particularly one in the food industry. Start-up costs refer to the expenses incurred before a business begins operations, which help to prepare the business for the market. Cooking utensils fall into this category as they are necessary for preparing the products or services that the business will offer, and their purchase is typically part of the initial expenditure required to get the operations up and running. Other items, while related to running a business, do not qualify as start-up costs in the same way. Gas can be considered an operating expense once the business is running, but it is not a direct start-up requirement. Truck lease payments also fall into the category of ongoing operational costs rather than initial set-up expenses. Employee salaries, much like truck lease payments, are considered expenses incurred during day-to-day operations, rather than costs specifically incurred to initiate the business. Thus, cooking utensils are essential start-up costs as they are proactive purchases needed to facilitate the primary business activities.