Chapter 5 Flashcards
A business that is owned and usually managed by one person
Sole Proprietorship
A legal form of business with two or more owners
Partnership
A legal entity with authority to act and have liability apart from its owner
Corporation
The responsibility of business owners for all of the debts of the business
Unlimited Liability
A partnership in which all owners share in operating the business and in assuming liability for the business’s debts
General Partnership
A partnership with one or more general partners and one or more limited partners
Limited Partnership
An owner (partner) who has unlimited liability and is active in managing the firm
General Partner
An owner who invests money in the business but does not have any management responsibility or liability for losses beyond the investment
Limited Partner
The responsibility of a business owners for losses only up to the amount they invest
Limited Liability
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
Master Limited Partnership (MLP)
A partnership that limits partners risk of losing their personal assets to only their own acts and omissions and to the acts and omissions of people under their supervision
Limited Liability Partnership (LLP)
A state-chartered legal entity with authority to act and have liability separate from its owners
Conventional (C) Corporation
A unique government creation that looks like a corporation but is taxed like a sole proprietorship and partnership
S Corporation
A company similar to an S corporation but without the special eligibility requirements
Limited Liability Company (LLC)
The result of two firms forming one company
Merger
One company’s purchase of the property and obligations of another company
Acquisition
The joining of two companies involved in different stages of related businesses
Vertical Merger
The joining of two firms in the same industry
Horizontal Merger
The joining of two firms in completely unrelated industries
Conglomerate Merger
An attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing
Leveraged Buyout (LBO)
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
Franchise Agreement
A company that develops a product concept and sells others the rights to make and sell the products
Franchisor
The right to use a specific business’s name and sell its products or services in a given territory
Franchise
A person who buys a franchise
Franchisee
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
Cooperative
