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Business 101 > Chapter 5 > Flashcards

Chapter 5 Flashcards

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1
Q

Sole Proprietorship

A

A business owned and managed by one person.

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2
Q

Partnership

A

When two or more people legally agree to become co-owners of a business

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3
Q

Corporation

A

A legal entity with authority to act and have liability separate from its owners

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4
Q

General Partnership

A

All owners share in operating the business and in assuming liability for the business’s debts.

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5
Q

Limited Partenership

A

Has one or more general partners and one or more limited partners.

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6
Q

General Partner

A

An owner (Partner) who has unlimited liability and is active in managing the firm.

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7
Q

Limited Partner

A

An owner who invests money in the business but does not have any management responsibility or liability for losses beyond their investment.

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8
Q

Limited Liability

A

Means that the limited partners liability for the debts of the business is limited to the amount they put into the company. Personal assets are not at risk.

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9
Q

Master limited partnership

A

A partnership that looks much like a corporation but is taxed like a partnership and thus avoids the corporate income tax.

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10
Q

Limited Liability Partnership

A

Limits parteners risk of losing their personal assets to only their own acts and omissions and to the acts and omissions of people under their supervision.

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11
Q

Conventional corporation

A

A state chartered legal entity with authority to act and have liability separate from its owners (stockholders)

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12
Q

S Corporation

A

A unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships.

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13
Q

Limited Liability Company (LLC)

A

A company similar to an s corporation but without the special eligibility requirements.

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14
Q

Merger

A

The result of two firms joinging to form one company

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15
Q

Acquisition

A

One Company’s purchase of the property and obligations of another company.

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16
Q

Vertical Merger

A

Joins two firms operating in different stages of related businesses.

17
Q

Horizontal Merger

A

The joining of two firms in the same industry.

18
Q

Conglomerate Merger

A

Unites two firms in completely unrelated industries in order to diversify business operations and investments.

19
Q

Leveraged buyout (LBO)

A

An attempt by employees, managers, or investors to buy out the stockholders in a company through borrowing.

20
Q

Franchise Agreement

A

An arrangement whereby someone with a good idea for a business sells the right to use the business name and sell a product or service to others in a given terrritory.

21
Q

Franchise

A

The right to use a specific business’s name and sell its products or services in a given territory

22
Q

Franchisee

A

A person who buys a franchise

23
Q

Cooperative (Co-Op)

A

A Business owned and controlled by the people who use it - producers, consumers, or workers with similar needs who pool their resources for mutual gain.

24
Q

Advantages of a sole proprietorship:

A
  • Ease of starting and ending the business
  • Ability to be your own boss
  • Pride of ownership
  • Leaving a legacy
  • Retention of company profits
  • No special taxes
25
Q

Disadvantages of a sole proprietorship:

A
  • Unlimited Liabilty - the risk of personal losses
  • Limited financial resources
  • Management difficulties
  • Overwhelming Time Commitment
  • Few fringe benefits
  • Limited growth
  • Limited life span
26
Q

Advantages of partnership:

A
  • More financial resources
  • Shared management and pooled/complementary skills and knowledge
  • Longer survival
  • No special taxes
27
Q

Disadvantages of partnerships

A
  • Unlimited Liability
  • Division of profits
  • Difficulty of termination
  • Disagreement among partners
28
Q

Advantages of corporations

A
  • Limited liability
  • Ability to raise more money for investment
  • Size
  • Perpetual life
  • Ease of ownership change
  • Ease of attracting talented employees
  • Separation of ownership from management
29
Q

Disadvantages of corporations

A
  • Initial Cost
  • Extensive paperwork
  • Double taxation
  • Two tax returns
  • Size
  • Difficulty of termination
  • Possible conflict with stockholders and board of directors
30
Q

Limited Liability Company Advantages:

A
  • Limited liability
  • Choice of taxation
  • Flexible ownership rules
  • Flexible distribution of profits and losses
  • Operating flexibility
31
Q

Limited Liability Company Disadvantages:

A
  • No Stock
  • Fewer Incentives
  • Taxes
  • Paperwork
32
Q

Franchise Advantages:

A
  • Management and marketing assistance
  • Personal ownership
  • Nationally recognized name
  • Financial advice and assistance
  • Lower failure rate
33
Q

Franchise Disadvantages:

A
  • Large start-up costs
  • Shared profit
  • Management regulation
  • Coattail effects
  • Restrictions on selling
  • Fraudulent franchisors
34
Q

Types of corporations:

A
  1. Alien Corporation
  2. Domestic Corporation
  3. Foreign Corporations
  4. Closed (private) corporations
  5. Open (public) corporatinos
  6. Quasi-public corporations
  7. Professional corporations
  8. Nonprogfit corporatinos
  9. Multinational corporations
35
Q

Three Main Forms of Business Ownership:

A
  • Sole Proprietorship
  • Partnership
  • Corporation

Business 101 (8 decks)

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