Chapter 1.2

Question 1

what are the two objectives of an enterprise?

Answer 1

to operate profitability and stay solvent

Question 2

what are the types of business?

Answer 2

1. services
2. trader
3. manufacture
4. raw materials
5. infrastructure
6. financial
7. insurance

Question 3

what does a service business sell?

Answer 3

it sells people’s time rather than tangible/physical products. it gets its income from fees, rents, interests, royalties, retainers, and commissions.

Question 4

what does a trade business sell?

Answer 4

also called merchandising business, it buys ready-made products and sells them

Question 5

what does a manufacturing business do?

Answer 5

also called fabricator, designs products, aggregates components and assembles finished products

Question 6

what does a raw material business do?

Answer 6

it grows and extracts raw materials (ex. farming, mining, oil)

Question 7

what does an infrastructure business sell?

Answer 7

it sells the utilization of infrastructure (ex. transport, hotels, telecoms, sport facilities, property management)

Question 8

what does a financial business do?

Answer 8

the type of business that receives deposits, lends and invests money

Question 9

what does an insurance business do?

Answer 9

it assumes the financial risk of a covered event on behalf of an individual or company

Question 10

what are the four forms of business ownership?

Answer 10

1. single proprietorship
2. partnership
3. corporation
4. cooperative

Question 11

what is a single proprietorship?

Answer 11

also called sole proprietorship or just plainly proprietorship, is a business owned by one person. these business owners are referred to as entrepreneurs.

Question 12

where do you register a sole proprietorship?

Answer 12

Department of Trade and Industry (DTI)

Question 13

what is the business entity principle?

Answer 13

from an accountant’s POV, the transactions that happen within the business is entirely separate to the owner’s personal transactions. but from a legal POV, the business and the owner are not considered separate and distinct entities.

Question 14

what is a partnership?

Answer 14

a business that has two or more owners are called partners.

Question 15

where do you register a partnership?

Answer 15

Securities and Exchange Commission (SEC)

Question 16

what is a corporation?

Answer 16

a business that has its ownership capitalization divided into hundreds and thousands of transferable shares of stocks. it must have at least 5 owners or investors called shareholders or stockholders.

Question 17

where do you register a corporation?

Answer 17

incorporators, a group of persons who want to register a corporation must file an application to the Securities ad Exchange Commission (SEC).

Question 18

what is a cooperative?

Answer 18

A cooperative business is a legal business structure that is owned and governed by, and functions for, the benefit of those who use its services. They are owned by those that work for it, are served by it, or both. Members of co-ops are all owners and managers in the business, sometimes called user-owners

Question 19

what is a patronage refund?

Answer 19

it pertains to the profit that a cooperative returns to its owners.

Question 20

where do you register a cooperative?

Answer 20

Cooperative Development Authority (CDA)