Chapters 26, 27, 28, and 29 Vocabulary Flashcards
One who initiates and assumes the financial risk of a new business enterprise and undertakes to provide or control its management.
Entrepreneur
The simplest form of business organization, in which the owner is the business. The owner reports business income on his or her personal income tax return and is legally responsible for all debts and obligations incurred by the business.
Sole Proprietorship
Any arrangement in which the owner of a trademark, trade name, or copyright licenses another to use that trademark, trade name, or copyright in the selling of goods or services.
Franchise
One receiving a license to use another’s (the franchisor’s) trademark, trade name, or copyright in the sale of goods or services.
Franchisee
One licensing another (the franchisee) to use the owner’s trademark, trade name, or copyright in the selling of goods or services.
Franchisor
An agreement by two or more persons to carry on, as co-owners, a business for profit.
Partnership
A business entity that has no tax liability. The entity’s income is passed through the owners, and they pay taxes on the income.
Pass-Through Entity
A tax return submitted by a partnership that reports the business’s income and losses. The partnership itself does not pay taxes on the income, but each partner’s share of the profit (whether distributed or not) is taxed as individual income to that partner.
Information Return
A written agreement that sets forth each partner’s right and obligations with respect to the partnership.
Articles of Partnership
A partnership imposed by a court when nonpartners have held themselves out to be partners, or have allowed themselves to be held out as partners, and others have detrimentally relied on their misrepresentations.
Partnership by Estoppel
In partnership law, an order granted by a court to a judgement creditor that entitles the creditor to attach a partner’s interest in the partnership.
Charging Order
In partnership law, the partner’s shared liability for partnership obligations and debts. A third party must sue all of the partners as a group, but each partner can be held liable for the full amount.
Joint Liability
In partnership law, a doctrine under which a plaintiff may sue, and collect a judgement from, all of the partners together (jointly) or one or more of the partners separately (severally, or individually). A partner can be held liable even if she or he did not participate in, ratify, or know about the conduct that gave rise to the lawsuit.
Joint and Several Liability
The severance of the relationship between a partner and a partnership.
Dissociation
The amount payable to a partner on his or her dissociation from a partnership, based on the amount distributable to that parter if the firm were wound up on that date, and offset any damages for wrongful dissociation.
Buyout Price
The formal disbanding of a partnership or a corporation. Partnerships can be dissolved by acts of the partners, by operation of law, or by judicial decree.
Dissolution
The second of two stages in the termination of a partnership or corporation, in which the firm’s assets are collected, liquidated, and distributed, and liabilities are discharged.
Winding Up
A hybrid form of business organization that is used mainly by professionals who normally do business in a partnership. This is a pass-through entity for tax purposes, but a partner’s personal liability for the malpractice of other partners is limited.
Limited Liability Partnership (LLP)
A partnership consisting of one or more general partners and one or more limited partners.
Limited Partnership (LP)
In a limited partnership, a partner who assumes responsibility for the management of the partnership and has full liability for all partnership debts.
General Partner
In a limited partnership, a partner who contributes capital to the partnership but has no right to participate in its management and has no liability for partnership debts beyond the amount of her or his investment.
Limited Partner
The document that must be filed with a designated state official to form a limited partnership.
Certificate of Limited Partnership
A hybrid form of business enterprise that offers the limited liability of a corporation and the tax advantages of a partnership.
Limited Liability Company (LLC)
A person who has an ownership interest in a limited liability company.
Member
The document filed with a designated state official by which a limited liability company is formed.
Articles of Organization
An agreement in which the members of a limited liability company set forth the details of how the business will be managed and operated.
Operating Agreement
A joint undertaking by two or more persons or business entities to combine their efforts or their property for a single transaction or project or for a related series of transactions or projects. Generally treated like a partnership for tax or other legal purposes.
Joint Venture
A group of individuals or firms that join together to finance a project.
Syndicate (Investment Group)
A hybrid form of business organization that combines characteristics of a corporation and a partnership. Usually this is regarded as a partnership for tax and other legal purposes.
Joint Stock Company
A form of business organization, created by a written trust agreement, that resembles a corporation. Legal ownership and management of this organization’s property stay with the trustees, and the profits are distributed to the beneficiaries, who have limited liability.
Business Trust
An association, which may or may not be incorporated, that is organized to provide an economic service to its members. When unincorporated, these are often treated like partnerships for tax and other legal purposes.
Cooperative
A legal entity formed in compliance with statutory requirements that is distinct from its shareholder-owners.
Corporation
A distribution of corporate profits to the corporation’s shareholders in proportion to the number of shares held.
Dividend
The portion of a corporation’s profits that has not been paid out as dividends to shareholders.
Retained Earnings
In a given state, a corporation that is organized under the law of that state.
Domestic Corporation
In a given state, a corporation that does business in that state but is not incorporated there.
Foreign Corporation
A corporation formed in another country but doing business in the United States.
Alien Corporation
A corporation whose shares are publicly traded in securities markets, such as the New York Stock Exchange or the NASDQ.
Publicly Held Corporation
A corporation whose shareholders are limited to a small group of persons, often family members.
Close Corporation
A close business corporation that has most corporate attributes, including limited liability, but qualifies under the Internal Revenue Code to be taxed as a partnership.
S Corporation
A for-profit corporation that seeks to have a material positive impact on society and the environment. It is available by statute in a number of states.
Benefit Corporation
The document that is filed with the appropriate state official, usually the secretary of state, when a business is incorporated and that contains basic information about the corporation.
Articles of Incorporation
The internal rules of management adopted by a corporation at its first organizational meeting.
Bylaws
Generally, stocks, bonds, or other items that represent an ownership interest in a corporation or a promise of repayment of debt by a corporation.
Securities
A security that evidences a corporate (for government) debt.
Bond
Shares of ownership in a corporation that give the owner a proportionate interest in the corporation with regard to control, earnings, and net assets. Lowest in priority with respect to payment of dividends and distribution of the corporation’s assets on dissolution.
Common Stock
Stock that has priority over common stock as to payment of dividends and distribution of assets on the corporation’s dissolution.
Preferred Stock
Financing provided by professional, outside investors (venture capitalists) to new business ventures.
Venture Capital
Funds invested by a private equity firm in an existing corporation, usually to purchase and reorganize it.
Private Equity Capital
A cooperative activity in which people network and pool funds and other resources via the Internet to assist a cause (such as disaster relief) or invest in a venture (business).
Crowdfunding
In a corporate dissolution, a court-appointed person who winds up corporate affairs and liquidates corporate assets.
Receiver
Acts of a corporation that are beyond its express and implied powers to undertake (the Latin phrase means “beyond the powers.”).
Ultra Vires Acts
The action of a court to disregard the corporate entity and hold the shareholders personally liable for corporate debts and obligations.
Piercing the Corporate Veil
The put funds or goods together into one mass so that they are mixed to such a degree that they no longer have separate identities.
Commingle
A person on the board of directors who is also an officer of the corporation.
Inside Director
A person on the board of directors who does not hold a management position at the corporation.
Outside Director
The number of members of a decision-making body that must be present before business may be transacted.
Quorum
A rule under which courts will not hold corporate officers and directors liable for honest mistakes of judgement and bad business decisions that were made in good faith.
Business Judgement Rule
When a shareholder formally authorizes another to serve as his or her agent and vote his or her shares in a certain manner.
Proxy
A certificate issued by a corporation evidencing the ownership of a specified number of shares in the corporation.
Stock Certificate
The right of a shareholder in a corporation to have the first opportunity to purchase new issue of that corporation’s stock in proportion to the amount of stock already owned by the shareholders.
Preemptive Rights
A suit brought by a shareholder to enforce a corporate case of action against a third person.
Shareholder’s Derivative Suit
