Chapter 8 "Business Organization" Vocab

Question 1

requirement that an owner is personally and fully responsible for all losses and debts of a business; applies to proprietorships and general partnerships

Answer 1

Unlimited liability

Question 2

form of a business organization recognized by law as a separate legal entity with all the rights and responsibilities of an individual, including the right to buy and sell property, enter into legal contracts, and to sue and be sued

Answer 2

Corporation

Question 3

feature of taxation that allows stockholders’ dividends to be taxed both as corporate profit and as personal income

Answer 3

Double taxation

Question 4

check paid to stockholders, usually quarterly, representing a portion of corporate profits

Answer 4

Dividend

Question 5

nonprofit association performing some kind of economic activity for the benefit of its members

Answer 5

Cooperative, co-op

Question 6

unincorporated business owned and operated by 2 or more people who share the profits and have unlimited liability for debts and obligations of the firm

Answer 6

Partnership

Question 7

corporation producing and selling without regard to national boundaries and whose business activities are located in several different countries

Answer 7

Multinational

Question 8

gradual wear on capital goods

Answer 8

Depreciation

Question 9

person that invests in the business model of the franchisor with his/her own money and start-up costs

Answer 9

Franchisee

Question 10

combination of firms producing the same kind of product

Answer 10

Horizontal merger

Question 11

combination of firms involved in different steps of manufacturing, marketing, or sales

Answer 11

Vertical merger

Question 12

nonprofit service cooperative that accepts deposits, makes loans, and provides other financial services

Answer 12

Credit union

Question 13

situation in which a firm legally ceases to exist when an owner dies or quits, or a new owner is added; applies to sole proprietors and partnerships

Answer 13

Limited life

Question 14

people who own a share/shares of stock in a corporation, same as shareholders

Answer 14

Stockholders

Question 15

firm with 4+ businesses making unrelated products, with no single business responsible for majority of its sales

Answer 15

Conglomerate

Question 16

report showing a business’s sales, expenses, and profits for a certain period, usually 3 months or a year

Answer 16

Income statement

Question 17

unincorporated business owned and run by a single person who has rights to all profits and unlimited liability for all debts of the firm; most common form of business organization in the U.S.

Answer 17

Sole proprietorship

Question 18

business investment that involves renting or leasing another successful business model

Answer 18

Franchise

Question 19

economic institution that operates like a business, but doesn’t seek financial gain; schools, churches, and community-service organizations are examples

Answer 19

Nonprofit organization

Question 20

business-sponsored nonprofit organization providing information on local companies to consumers

Answer 20

Better Business Bureau