Forms of Ownership Flashcards
Sole Proprietorship
A business owned by a single person
Unlimited Liability
A legal condition under which any damages or debts incurred by a business are the owner’s personal responsibility
Personal income taxes are taken into consideration when business taxes come around
Partnership
An unincorporated company owned by two or more people
Corporation
A legal entity, distinct from any individual persons, that has the power to own property and conduct business
Shareholders - owners
Investors who purchase shares of stock in a corporation
Private corporation
A corporation in which all the stock is owned by only a few individuals or companies and is not made available for purchase by the public
Public corporation
A corporation in which stock is sold to anyone who has the means to buy it
Liquidity
A measure of how easily and quickly an asset such as corporate stock can be converted into cash by selling it
Board of directors
A group of professionals elected by shareholders as their representatives, with responsibility for the overall direction of the company and the selection of top executives
Merger
An action taken by two companies to combine and perform as a single entity
Acquisition
An action taken by one company to buy a controlling interest in the voting stock of another company
Vertical Merger
Different stages or levels of the same industry
Horizontal Merger
Different companies at the same stage or level
Conglomerate Merger
Companies in unrelated industries
