Econ Ch 8 Flashcards
a requirement that an owner is personally and fully responsible for all losses and
debts of a business; applies to proprietorships and general partnerships.
Unlimited Liability
an unincorporated business owned and operated by two or more people who share the
profits and have unlimited liability for the debts and obligations of the firm.
Partnerships
a form of 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 sue and be sued.
Cooperation
certificate of ownership in a corporation; can be either common or preferred stock.
Stock
check paid to stockholders, usually quarterly, representing a portion of corporate profits.
Dividend
formal contract to repay borrowed money and interest on the borrowed money at regular future
intervals.
Bond
payment made for the use of borrowed money; usually paid at periodic intervals for long-term
bonds or loans.
Interest
requirement in which a corporation, but not its owners, is responsible for all losses
and debts of the business.
Limited Liability
business investment that involves renting or leasing another successful business model.
Franchise
measure of business profits determined by subtracting all expenses, including taxes, from
revenues.
Net income
total amount of new funds the business generates from operations; broadest measure of
profits for a firm because it includes both net income and non cash charges.
Cash Flow
combination of firms producing the same kind of product.
Horizontal Merger
combination of firms involved in different steps of manufacturing, marketing, or sales.
Vertical Merger
firm with four or more businesses making unrelated products, with no single business
responsible for the majority of its sales.
Conglomerate
provider of investment funds to a start-up business in exchange for partial
ownership of the business.
Venture capitalist
