The TExES Business and Finance 6-12 Exam is a certification examination that is designed to determine whether or not an individual possesses the knowledge necessary to teach business courses at the middle school or high school level in the Texas public school system. This exam assesses the individual’s knowledge of business-related topics such as accounting, business communication, business management, economics, ethics, finance, international business, legal concerns related to operating a business, and the methods to effectively teach these topics and other similar topics related to business. This exam is required in order for an individual to become a certified business teacher at the middle school or high school level within the state of Texas. The exam consists of 100 multiple-choice questions that are related to the following areas:
- Finance (20%)
- Business Management (19%)
- Ethics, Law, Business Communication and International Business (22%)
- Technology and Information Systems (21%)
- Leadership and Career Development (18%)
The exam-taker will have five hours to complete the exam and the exam will be scored on a scale of 100 – 300 with 240 set as the minimum score considered as passing for the exam. The Business and Finance 6-12 Exam is offered in a computer-based format and the registration fee for the exam is $131. However, there may be other exams and fees that are required in addition to this exam in order to become certified as an entry-level business teacher at the middle school or high school level within the state of Texas.
276 TExES Business and Finance 6-12 Exam Practice Questions
Sample Study Notes
1. Explain the EIN required by the Internal Revenue Service.
The employer identification number (EIN) is also called the federal tax ID number. It is the nine-digit number the Internal Revenue Service (IRS) assigns to a business. This number identifies a specific business, just like a social security number identifies a specific individual, and tells the IRS that this owner is required to file various business tax returns monthly, quarterly and annually. The business owner can obtain an EIN online at the Internal Revenue Service web site, www.irs.gov, or by mail or telephone. Before the owner can file any tax returns, the business must have an EIN. The IRS requires an EIN if the business:
- Has employees.
- Is a corporation or a partnership.
- Is required to pay employment, excise, alcohol, tobacco or firearms taxes.
- Withholds taxes on income paid to a non-resident alien.
- Has a Keogh retirement plan.
- Involves trusts, estates, real estate, mortgage investments, non-profit farmers’ cooperatives or plan administrators.
- If a business owner is unsure whether he needs an EIN, he should consult an accountant for advice.
2. Define an independent contractor.
An independent contractor is a self-employed individual who performs a service for a client. The client is required to report earnings of $600 or more in one year to the Internal Revenue Service (IRS), and provide the independent contractor with a 1099 by January 31st.
An independent contractor works on his own timeframe, uses his own equipment, hires and compensates any additional people required to complete the job, and is usually paid on a per job or per piece rate. The contractor and the client may have a contractual agreement that states each party’s responsibilities. When a person is classified as an independent contractor, the hiring company avoids:
- Withholding federal and state income taxes.
- Paying the employer’s portion of Social Security and Medicare taxes.
- Paying federal and state unemployment insurance premiums.
- State disability insurance premiums and workers’ compensation costs.
- Providing any fringe benefits.
- Liability for negligence or EEOC non-compliance by the contractor.
3. Explain sales tax.
A sales tax is a levy placed on the retail price of merchandise and services sold to the public. The state legislature determines what merchandise and services are levied and determines the percentage of the sale price each business must collect, e.g. 8.25%. Sales taxes are collected by the comptroller’s office. Cities and counties may also have sales tax requirements. They are set by the city council and elected county officials. These sales tax payments are made to the tax assessor collector’s office. Depending upon the amount of money collected, sales tax is paid on a monthly, quarterly or annual basis. The business or person collecting sales tax must apply for and receive a sales tax permit from the state prior to charging and collecting sales tax.
Every jurisdiction exempts certain organizations (churches, non-profit organizations, charities) from paying sales tax. Allowable exemptions vary. Qualifying groups must apply for a sales tax exemption certificate. If the buyer claims the exemption, he must provide a copy of the sales tax exemption certificate at the time of payment.
4. Discuss the Uniform Commercial Code.
The Uniform Commercial Code is a set of rules and provisions enacted to simplify and clarify commercial transactions, with uniform laws that govern all jurisdictions. If a transaction involves two or more states or another nation, the provisions of either may be applied as long as all the parties involved agree which code is to be used. Both buyer and seller have certain rights.
When a buyer purchases an item, he receives clear title. He accepts in good faith that the seller legally owned the item and had authorization to sell it and transfer ownership. The buyer has the right to take possession according to the terms of the sale.
If the buyer refuses to take delivery, fails to make the agreed- upon payment as specified in the terms of the sale, or payment is rejected (insufficient funds, buyer insolvency, etc.), the seller may: cancel the sale; stop delivery; resell the item to recover any monetary loss incurred; demand return of the title and other paperwork provided at the time of the sale.
5. Discuss verbal and non-verbal communication and internal and external business communication.
The American Heritage College Dictionary defines communication as “the exchange of thoughts, messages or information.” Communication requires a “sender” as well as a “receiver,” and both parties must be actively engaged for the process to be effective. It doesn’t matter if the information is spoken, written or gestured, if one person doesn’t do his part, the process breaks down and the message is misunderstood, misinterpreted or missed altogether.
The purpose of communication is to convey information, give advice, and ask questions. The method can be verbal (speaking, singing, tone of voice) or nonverbal (body language, hand gestures, eye contact). Frequently, both methods are used in conversations, lectures and presentations.
Business communication can be internal or external. Internal communication is used to outline the corporate vision, explain policies and procedures, and inform employees and shareholders of changes. External communication reaches outside the company’s four walls to create a positive image, inform, entertain, offer products and services, and explain the commitment to customer satisfaction. These are just a few examples of typical internal and external business communications.
6. Define these legal terms: complaint, court order, subpoena, testimony, summons, discovery, mediation, and arbitration.
These definitions are based on information in The American Heritage College Dictionary.
- COMPLAINT: a statement made in a civil action; a formal charge, made under oath, about the commission of a crime
- COURT ORDER: a direction or command given by a court or other adjudicative body that is entered into the record but not necessarily included in the final judgment
- SUBPOENA: a written order issued by the court, commanding a person to give testimony
- TESTIMONY: a spoken or written statement given under oath
- SUMMONS: a notice instructing a person to appear in court as a defendant, juror or witness
- DISCOVERY: when used as a legal term means “data or documents that someone involved in a legal action must disclose to another person before or during a proceeding”
- MEDIATION: the “attempt to bring about a peaceful settlement between disputing parties through the intervention of a neutral third party”
- ARBITRATION is the legal process used by disputing parties when they “submit their differences to the judgment of an impartial person that has been appointed by mutual consent or statutory provision”
7. Discuss the importance of a realistic budget.
Many people consider budgets a waste of time because they rarely reflect reality. But there has to be some kind of plan for how funds will be allocated. The American Heritage College Dictionary defines a budget as “an itemized summary of expenditures for a given period.” The budget determines what funds will be available and when, how they will be spent, and by whom.
- A PERSONNEL BUDGET is based on headcount. Generally, personnel costs are 60-70% of a budget plan, so headcount must be accurate with all associated costs included.
- An OPERATING BUDGET includes all of the costs associated with running a business. Some are fixed, while some vary from month to month; all costs, however, must be budgeted. Most operating budgets are based on 2-5 years of historical data.
- A CAPITAL BUDGET allocates funds for large ticket items. Many items considered capital expenses are depreciated on some sort of schedule, e.g. over three, five or seven years. In some cases, the Internal Revenue Service sets the depreciation schedule.
8. Discuss business continuity planning.
Business continuity planning (BCP) defines how the organization will continue to function after a natural or made-made disaster occurs. The plan assumes all risks, given enough time, will happen at some point, and the company must be able to continue operating. BCP recognizes that some risks have long-term consequences, and explains how to address each risk so the company can keep functioning for as long as it takes to return to normal operations.
A business continuity manual is a comprehensive, realistic, easy-to-use, written document that contains all the critical information needed in the event of disruption in operations. It addresses conditions before, during and after the event. For each risk, the manual outlines who and what may be affected, how long the event might last, and describes the best response, while acknowledging it is impossible to address every conceivable scenario. The manual should list the names, addresses and contact numbers of all key staff members, and any applicable government regulatory reporting requirements with contact names and numbers. A copy of the manual should be stored off-site.
9. Describe a leader.
Leadership is more about behavior than a specific skill set. Skills such as decision-making, listening, communicating and motivating are important, but can be learned and honed on the job. Qualities such as integrity, honesty, humility, commitment, passion, wisdom and sensitivity, which are present in good leaders, are part of the person’s character. These traits are lived on and off the job, in public and in private. They are integral to who the person is and cannot be faked. Jack Welch, businessman, writer and former CEO, proposed these fundamental leadership principles:
- There is only one way – the straight way.
- Be open to the best everyone has to offer.
- Make sure the right people are in the right jobs.
- Develop an informal environment.
- Make sure everyone knows they count.
- The true test of self-confidence is the courage to be open.
- Business has to be fun.
- Never underestimate the other guy.
- Understand where real value is added and put the best people there.
- Know when to meddle and when to let go.
10. Discuss international business ethics.
The American Heritage College Dictionary defines ethics as “a set of principles of right conduct; a theory or system of moral values.” Business ethics is applying this definition to an organization’s approach to conducting affairs in the commercial arena. In the early days, business people did whatever was expedient to sell their goods and services and make a profit. Because of many factors, in the last few years the international business community has been forced to take a look at some of its practices and find alternate ways of conducting commerce. This has resulted in new laws in many countries. The tricky problem is how to reconcile core values that may be very different in individual cultures. Issues being studied include:
- A search for accepted universal values.
- Comparison of business traditions in different countries and cultures.
- How religious perspectives affect commerce.
- Globalization and cultural imperialism.
- Varying standards, e.g. child labor, living wages, etc.
- Multinational groups outsourcing to take advantage of varying standards.
- Conducting business with rogue governments.