Chapter 3

Question 1

3 types of ownership

Answer 1

Sole proprietorship
General partnership
Corporation

Question 2

Sole proprietorship

Answer 2

Owner and operates by 1 person

Question 3

Advantages of sole proprietorships

Answer 3

Cheapest
Few gov. Regulations
Owner has complete control

Question 4

Disadvantages of sole proprietorships

Answer 4

Owner supplies al
Death results in dissolution
Liable for everything

Question 5

Partnership

Answer 5

Business joined by 2 or more people

Question 6

Limited partnership

Answer 6

Single general partner and any number of limiter partners

Question 7

Partnership agreement

Answer 7

Cash/contribution of partners
Division of income/loss
Responsibilities

Question 8

Advantages of partnerships

Answer 8

Inexpensive to start
Shares responsibilities
Easier financing
No income tax

Question 9

Corporation

Answer 9

Legal entity entirely separate from the parties who own it (shareholders)

Question 10

Board of directors

Answer 10

People who are legally responsible for governing a corporation

Question 11

Limited liability

Answer 11

Owner or investor can’t lose more than the amount invested

Question 12

Types of corporations

Answer 12

C-Corp
S-corp
B-corp

Question 13

S-corporations

Answer 13

Limits the liability of its owners and avoid having their earnings taxed twice

Question 14

LLC

Answer 14

Same definition as s-corp but fewer ownership restrictions

Question 15

Co-op

Answer 15

Business owner and controller by those who use its services

Question 16

Merger

Answer 16

2 companies combine to form a new Company

Question 17

Acquisition

Answer 17

Purchase of one Company by another