chapter four Flashcards
sole proprietorship
a business that is owned (and usually operated) by one person
unlimited liability
a legal concept that holds a business owner personally responsible for all the debts of the business
partnership
a voluntary association of two or more persons to act as co-owners of a business for profit
general partner
a person who assumes full or shared responsibility for operating a business
limited partner
a person who invests money in a business but has no management responsibility or liability for losses beyond the amount he or she invested in the partnership
corporation
an artificial person created by law with most of the legal rights of a real person, including the rights to start and operate a business, to buy or sell property, to borrow money, to sue or be sued, and to enter into binding contracts
stock
the shares of ownership of a corporation
stockholders
a person who owns a corporation’s stock
closed corporation
a corporation whose stock is owned by relatively few people and is not sold to the general public
open corporation
a corporation whose stock can be bought and sold by any individual
domestic corporation
a corporation in the state in which it is incorporated
foreign corporation
a corporation in any state in which it does business except the one in which it is incorporated
alien corporation
a corporation chartered by a foreign government and conducting business in the United States
common stock
stock owned by individuals or firms who may vote on corporate matters but whose claims on profits and assets are subordinate to the claims of others
preferred stock
stock owned by individuals or firms who usually do not have voting rights but whose claims on dividends are paid before those of common-stock owners
dividend
a distribution of earnings to the stockholders of a corporation
proxy
a legal form listing issues to be decided at a stockholders’ meeting and enabling stockholders to transfer their voting rights to some other individual or individuals
board of directors
the top governing body of a corporation, the members of which are elected by the stockholders
corporate officers
the chairman of the board, president, executive vice presidents, corporate secretary, treasurer, and any other top executive appointed by the board of directors
limited liability
a feature of corporate ownership that limits each owner’s financial liability to the amount of money that he or she has paid for the corporation’s stock
S corporation
a corporation that is taxed as though it were a partnership
limited-liability corporation (LLC)
a form of business ownership that combines the benefits of a corporation and a partnership while avoiding some of the restrictions and disadvantages of those forms of ownership
not-for-profit corporation
a corporation organized to provide a social, educational, religious, or other service rather than to earn a profit
joint venture
an agreement between two or more groups to form a business entity in order to achieve a specific goal to operate for a specific period of time
