Term
| What are the three major forms of business ownership? |
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Definition
| Sole proprietorship, partnerships, and corporations |
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Term
| What is a business that is owned, and usually managed, by one person? |
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Definition
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Term
| What is a legal form of business with two or more owners? |
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Definition
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Term
| What is a legal entity with authority to act and have liability? |
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Definition
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Term
| Which type of business earns 81% of total business receipts? |
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Definition
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Term
| What type of business comprise 20% of businesses, but 80% of total business receipts? |
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Definition
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Term
| What makes of 72% of businesses, but comprises 6% of business receipts? |
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Definition
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Term
| What is 8% of businesses, but makes 13% of business receipts? |
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Definition
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Term
| What are the 6 advantages of sole proprietorships? |
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Definition
| Ease of starting/ending the business, ability to be your own boss, pride of ownership, leaving a legacy, retention of company profits, and no special taxes |
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Term
| What is the responsibility of business owners for all of the debts of the business? |
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Definition
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Term
| What are the 7 disadvantages of sole proprietorships? |
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Definition
| Unlimited liability, limited financial resources, management difficulties, overwhelming time commitment, few fringe benefits, limited growth, and a limited life span |
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Term
| What is a partnership in which all owners share in operating the business and in assuming liability for the business's debts? |
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Definition
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Term
| What is a partnership with one or more general partners and one or more limited partners? |
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Definition
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Term
| What is an owner (partner) who has unlimited liability and is active in managing the firm? |
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Definition
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Term
| Who is an owner who invests money in the business but does not have any management responsibility or liability for losses beyond his or her investment? |
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Definition
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Term
| What is the responsibility of a business's owners for losses only up to the amount they invest; personal assets are not at risk? |
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Definition
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Term
| What is a partnership that looks much like a corporation (in that it acts like a corporation and is traded on a stock exchange) but is taxed like a partnership and thus avoids the corporate income tax? |
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Definition
| Master limited partnership (MLP) |
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Term
| What 3 industries are master limited partnerships? |
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Definition
| Oil, real estate, and gas companies |
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Term
| What is a partnership that limits partners' risk of losing their personal assets to only their own acts and omissions of people under their supervision? |
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Definition
| Master liability partnership (MLP) |
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Term
| What are the 3 elements the comprise the Uniform Partnership Act (UPA)? |
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Definition
| Common ownership, shared profits and losses, and the right to participate in managing the operations of the business |
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Term
| What are the 4 advantages of partnerships? |
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Definition
| More financial resources, shared management and pooled/complementary skills and knowledge, longer survival, and no special taxes |
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Term
| What are the 4 disadvantages of partnerships? |
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Definition
| Unlimited liability, division of profits, disagreements among partners, and difficulty of termination |
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Term
| What is a state-chartered legal entity with authority to act and have liability separate from its owners(stockholders)? |
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Definition
| Conventional corporation (C) |
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Term
| What are the 7 advantages of corporations? |
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Definition
| Limited liability, ability to raise more money for investment, size, perpetual life, ease of ownership change, ease of attracting talented employees, and separation of ownership from management |
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Term
| What type of corporation does business in the United States but are chartered (incorporated) in another country? |
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Definition
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Term
| What type of corporation does business in the state in which they are chartered (incorporated)? |
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Definition
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Term
| What type of corporation does business in one state but are chartered in another? |
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Definition
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Term
| What type of corporation has stock that is held by few people and isn't available to the general public? |
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Definition
| Closed (private) corporations |
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Term
| What type of corporation sells stock to the general public? |
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Definition
| Open (public) corporations |
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Term
| What type of corporation are chartered by the government as an approved monopoly to perform services to the general public? |
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Definition
| Quasi-public corporations (Example is utility companies) |
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Term
| What type of corporation are owned by those who offer professional services (Doctors or lawyers)? |
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Definition
| Professional corporations |
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Term
| What type of corporation doesn't seek personal profit for their owners? |
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Definition
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Term
| What type of corporation operates in several countries? |
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Definition
| Multinational corporations |
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Term
| What are the 7 disadvantages of corporations? |
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Definition
| Initial cost, extensive paperwork, double taxation, two tax returns, size, difficulty of termination, and possible conflict with stockholders or board of directors |
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Term
| What is the process of starting a corporation called? |
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Definition
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Term
| What is a unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships? |
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Definition
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Term
| What 4 things must a business have to be listed as an S corporation? |
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Definition
| No more than 100 shareholders, have shareholders that are individuals/estates and permanent residents of the US, have only 1 class of stock, and derive no more than 25% of income from passive sources (rents, royalties, and interest) |
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Term
| If a corporation loses its S corporation status, how many years must it wait to be classified as such again? |
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Definition
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Term
| What is a company similar to an S corporation but without the special eligibility requirements? |
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Definition
| Limited liability company (LLC) |
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Term
| What are 5 advantages of limited liability companies (LLC)? |
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Definition
| Limited liability, choice of taxation, flexible ownership rules, flexible distribution of profits and losses, and operating flexibility |
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Term
| What are 4 disadvantages of limited liability companies? |
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Definition
| No stock, fewer incentives, taxes, and paperwork |
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Term
| What is the result of 2 firms forming one company? |
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Definition
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Term
| What is one company's purchase of the property and obligations of another company? |
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Definition
| Acquisition (Newman and Newman Media/Chancellor Communications) |
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Term
| What is the joining of two companies involved in different stages of related businesses? |
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Definition
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Term
| What is the joining of 2 firms in the same industry? |
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Definition
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Term
| What is the joining of firms in totally different industries? |
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Definition
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Term
| What type of merger would be a soft drink company buying an artificial sweetener company? |
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Definition
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Term
| What type of merger would a soft drink company buying a mineral water company be? |
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Definition
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Term
| What type of merger would a soft drink company buying a snack food company be? |
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Definition
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Term
| What do mergers between larger companies have to prove to the Federal Trade Commission? |
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Definition
| That their merging won't limit competition |
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Term
| What must a firm do to make their company private again? |
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Definition
| Buy back all their stocks from stockholders |
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Term
| What is an attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing? |
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Definition
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Term
| What is an arrangement whereby someone with a good idea for a business sells the rights to use the business name and sell a product or service to others in a given territory? |
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Definition
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Term
| What are the 2 special kinds of business ownership? |
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Definition
| Franchises and cooperatives |
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Term
| What is a company that develops a product concept and sells others the rights to make and sell the products? |
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Definition
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Term
| What is the right to use a specific business's name and sell the products or services in a given territory? |
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Definition
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Term
| What is a person that buys a franchise? |
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Definition
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Term
| What % of businesses are franchises in the US? |
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Definition
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Term
| What are the 5 advantages of a franchise? |
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Definition
| Management and marketing assistance, personal ownership, nationally recognized name, financial advise and assistance, and lower failure rate |
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Term
| What are 6 disadvantages of a franchise? |
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Definition
| Large start-up cost, shared profit, management regulation, coattail effects, restrictions on selling, and fraudulent franchisors |
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Term
| What is a percentage commission based on sales of a franchise? |
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Definition
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Term
| What is a business owned and controlled by the people who use it to pool their resources for mutual gain? |
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Definition
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