Chapter 8 Vocab

Question 1

Managers and other key persons who give a company its general direction

Answer 1

Management team

Question 2

An interconnected system of relationships with other people

Answer 2

Social Network

Question 3

The advantage created by an individual’s connections in a social network

Answer 3

Social Capital

Question 4

A powerful sense of obligation to repay in kind what another has done for or provided to us

Answer 4

Reciprocation

Question 5

A business owned by one person, who bears unlimited liability for the enterprise

Answer 5

Sole Proprietorship

Question 6

Liability on the part of an owner that extends beyond the owner’s investment in the business

Answer 6

Unlimited Liability

Question 7

A legal entity formed by two or more co-owners to operate a business for profit

Answer 7

Partnership

Question 8

A document that states explicitly the rights and duties of partners

Answer 8

Partnership Agreement

Question 9

The liability of each partner resulting from any one partner’s ability to legally bind the other partners

Answer 9

Joint and Several Liability

Question 10

A business organization that exists as a legal entity and provides limited liability to its owners

Answer 10

Corporation

Question 11

A business organization that is recognized by the law as having a separate legal existence

Answer 11

Legal Entity

Question 12

An ordinary corporation taxed by the federal government as a separate legal entity

Answer 12

C Corporation

Question 13

A document that establishes a corporation’s existence

Answer 13

Corporate Charter

Question 14

A document specifying the number of shares owned by a stockholder

Answer 14

Stock Certificate

Question 15

The right of stockholders to buy new shares of stock before they are offered to the public

Answer 15

Preemptive Right

Question 16

A situation in which the courts conclude that incorporation has been used to perpetuate a fraud, skirt a law, or commit some wrongful act and thus remove liability protection from the corporate entity

Answer 16

Piercing the corporate Veil

Question 17

A partnership with at least one general partner and one or more limited partners

Answer 17

Limited Partnership

Question 18

A partner in a limited partnership who has unlimited personal liability

Answer 18

General Partner

Question 19

A partner in a limited partnership who is not active in its management and has limited personal liability

Answer 19

Limited Partner

Question 20

A type of corporation that offers limited liability to its owners and passes taxable income or losses on to stockholders

Answer 20

S corporation (Subchapter S Corporation)

Question 21

A form of organization in which owners have limited liability but pay personal income taxes on business profits

Answer 21

Limited Liability Company

Question 22

A form of corporation that shields owners from liability and is set up for individuals in certain professional practices

Answer 22

Professional Corporation

Question 23

A form of corporation for enterprises established to serve civic, educational, charitable, or religious purposes, not for generation of profits

Answer 23

Nonprofit Corporation

Question 24

Verification of whether a nonprofit organization is staying true to its stated purpose

Answer 24

Organizational Test

Question 25

An organizational relationship that links two or more independent business entities in a common endeavor

Answer 25

Strategic Alliance

Question 26

The governing body of corporation elected by stockholders

Answer 26

Board of Directors

Question 27

A group that serves as an alternative to a board of directors, acting only in an advisory capacity

Answer 27

Advisory board