Billy has a academic decatholon competition against Eric. The winner gets the company. Billy is winning and when Eric is given a tough question, he loses it and pulls out a gun. Billy is saved by the former classmate guy with the "People to kill" list, who shoots Eric in the butt. Billy graduates from high school, decides to give the company to Carl and go to college.
Continuity mistake: When Billy is in first grade, Miss Lippy sits all the kids down in a circle for story time. One little girl goes up to Billy and says, "You have a mis-shaped head.", while she stands in front of Billy. In the very next shot, you see her stepping over Billy's leg to sit in front of him. (00:18:50)
High School Principal: Mr. Madison, what you've just said, is one of the most insanely idiotic things I have ever heard. At no point in your rambling, incoherent response, were you even close to anything that could be considered a rational thought. Everyone in this room is now dumber for having listened to it. I award you no points, and may God have mercy on your soul.
Billy Madison: OK, a simple "wrong" would have done just fine.
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