Chapter 5: Business Ownership

Question 0

Partnership

Answer 0

A legal form of business with two or more owners

Question 1

Sole proprietorship

Answer 1

A business that is owned, and usually managed, by one person

Question 2

Corporation

Answer 2

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

Question 3

Unlimited liability

Answer 3

The responsibility of business owners for all the debts of the business

Question 4

General partnership

Answer 4

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

Question 5

Limited partnership

Answer 5

One or more general partners and one or more limited partners

Question 6

General partner

Answer 6

Owner who has unlimited liability and is active in managing the firm

Question 7

Limited partner

Answer 7

Owner who invests money in the business but doesn’t have any management responsibility or liability for losses beyond the investment

Question 8

Limited liability

Answer 8

The responsibility of a business’s owners for losses only up to the amount they invest

Question 9

Master limited partnership

Answer 9

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

Question 10

Limited liability partnership

Answer 10

A partnership that limits partners’s risk of losing their personal assets to only their own acts and omissions of people under their supervision

Question 11

Conventional corporation

Answer 11

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

Question 12

S Corporation

Answer 12

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

Question 14

Limited liability company

Answer 14

A company similar to an S Corporation but without the special eligibility requirements

Question 15

Merger

Answer 15

The result of two firms forming one company

Question 16

Acquisition

Answer 16

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

Question 17

Vertical Merger

Answer 17

The joining of two companies involved in different stages of related businesses.

Question 18

Horizontal merger

Answer 18

The joining of two firms in the same industry

Question 19

Conglomerate merger

Answer 19

The joining of firms in completely unrelated industries

Question 20

Leveraged buyout

Answer 20

An attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing

Question 21

Franchise agreement

Answer 21

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

Question 22

Franchisor

Answer 22

A company that develops a product concept and sells others the rights to make and sell the product

Question 23

Franchise

Answer 23

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

Question 24

Franchisee

Answer 24

A person who buys a franchise

Question 25

Cooperative

Answer 25

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