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Introduction to Business (Chapter 5)
Basic Key Terms and Definitions
22
Business
Undergraduate 1
02/17/2010

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Term
sole proprietorship
Definition
a business owned, and usually managed, by one person
Term
partnership
Definition
an organization where two or more people legally agree to become co-owners
Term
corporation
Definition
a legal entity with authority to act and have liability apart from its owners
Term
unlimited liability
Definition
any debts or damages incurred by the business are your debts and you must pay them, even if it means selling your home, your car, or whatever else you own
Term
general partnership
Definition
an arrangement in which all owners share in operating the business and in assuming liability for the business's debts
Term
limited partnership
Definition
an arrangement in which there are one or more general partners and one or more limited partners
Term
general partner
Definition
an owner (partner) who has unlimited liability and is active in managing the firm
Term
limited partner
Definition
an owner who invests money in the business but does not have any management responsibility or liability for losses beyond his or her investment
Term
limited liability
Definition
when the limited partners' liabilty for the debts of the business is limited to the amount they put into the company; their personal assets are not at risk
Term
master limited partnership (MLP)
Definition
a form of partnership which looks much like a corporation in that it acts like a corporation and is traded on the stock exchanges like a corporation, but it is taxed like a partnership and thus avoids the corporate income tax
Term
limited liability partnership
Definition
a form of partnership that limits partners' risk of losing their personal assets the the outcomes of only their own acts and omissions and those of people under their supervision
Term
conventional (C) corporation
Definition
a state-chartered legal entity with authority to act and have liability separate from its owners- its stockholders
Term
S corporation
Definition
a unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships
Term
limited liability company (LLC)
Definition
similar to an S corporation but without the special eligibility requirements
Term
merger
Definition
the result of two firms joining to form one company
Term
acquisition
Definition
one company's purchase of the property and obligations of another company
Term
vertical merger
Definition
the joining of two firms operating in different stages of related businesses
Term
horizontal merger
Definition
the joining of two firms in the same industry, allowing them to diversify of expand their products
Term
conglomerate merger
Definition
the uniting of firms in completely unrelated industries in order to diversify business operations and investments
Term
leveraged buyout (LBO)
Definition
an attempt by employees, management, or a group of investors to but you the stockholders in a company, primarily by borrowing the necessary funds
Term
franchise agreement
Definition
an arrangement whereby someone with a good idea for a business (the franchisor) sells the rights to use the business nae and sell a product or service (the franchise) to others (the franchisees) in a given territory
Term
cooperative
Definition
something owned and controlled by the people who use it, producers, consumers, or workers with similar needs who pool their resources for mutual gain
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