American Massage Therapy Association (AMTA) Practice Test

What are the initial expenses of a business called?

1. Investment capital

2. Expenses

3. Start-up costs

4. Budgeting

The correct answer is: Start-up costs

The term "start-up costs" refers specifically to the expenses incurred during the process of setting up a new business. These costs can include a variety of expenditures such as equipment purchases, office supplies, licensing fees, marketing, and any renovations needed for a physical space. Understanding start-up costs is crucial for entrepreneurs, as they provide a clear picture of the financial resources needed before a business becomes operational. Other terms, such as investment capital, might relate to the funds required to start a business but do not specifically denote the initial expenses themselves. While "expenses" could broadly refer to any spending involved in running a business, it does not capture the unique nature of the costs associated with initiating a new venture. Lastly, "budgeting" is a financial planning process that helps manage future expenses rather than describing the initial expenses of starting a business. Thus, "start-up costs" distinctly categorizes these initial financial outlays essential for launching a new enterprise.