Finals Flashcards
What role do sole proprietorships play in our economy?
Sole proprietorships are the most common form of business. About 75% of businesses are sole proprietorships.
What are the advantages and disadvantages of a sole proprietorship?
Some advantages are ease of start-up, fewer regulations, sole receiver of profit, full control, ease of discontinuation. Some disadvantages are, unlimited personal liability, limited access to resources, and lack of permanence.
What types of partnerships exist?
General partnership, limited partnership, and limited liability partnership.
What are the advantages and disadvantages of partnerships?
Advantages are limited liability for owners, transferable ownership, ability to attract capital, long life. Disadvantages are expense and difficulty of start-up, double taxation, potential loss of control by the founders, more legal requirements and regulations.
What types of corporations exist?
Closely held corporations and publicly held corporations.
What are the advantages and disadvantages of incorporation?
Advantages are limited liability for owners, transferable ownership, ability to attract capital, long life. Disadvantages are expense and difficulty of start-up, double taxation, potential loss of control by the founders, more legal requirements and regulations.
How do business franchises work?
Business franchises are a semi-independent business that pays fees to a parent company. In return, the business is granted the exclusive right to sell a certain product or service in a given area.
What are the three types of cooperative organizations?
Consumer cooperatives, service cooperatives, and producer cooperatives.
What are nonprofit organizations?
Organizations that are usually in the business of benefitting society. They include museums, public schools, the American Red Cross, hospitals, adoption agencies, churches, synagogues, YMCA’s and many other groups.
What are the three uses of money?
A medium of exchange, unit of account, store of value.
What are the six characteristics of money?
Durability, divisibility, limited supply, portability, uniformity, acceptability.
What Bank reform was passed after the Great Depression, how did it bring security to the institution of banking?
In 1933 congress passed the act that established the FDIC. The FDIC insures customer deposits if the bank fails.
What services do banks provide?
Storing money, credit cards, saving money, loans, mortgages.
How do banks make a profit?
The largest source of income for a bank is interest on loans they give out.
What are the different types of financial institutions?
Commercial banks, savings and loan associations, Credit unions, Financial companies, Electronic banking.
