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Introduction to Business > Introduction to Business and Enterprises > Flashcards

Introduction to Business and Enterprises Flashcards

1
Q

It is the human activity whose basic purpose is to satisfy consumer demands by making profit

A

Enterprise

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2
Q

The need for a product or service for which effective demand appear on the market

A

Consumer Demand

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3
Q

It is a long-term economic activity with own or rented assets and labor, for profit.

A

Business (Enterprise)

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4
Q

What are the four features of business as an enterprise?

A

1) Organizationally separate
2) Creators provide the financial conditions
3) Profit-oriented
4) Risks the investment of the founders and the income of the participants in the business

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5
Q

It is the organizational framework of the business enterprise.

A

Company

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6
Q

What are the stages of the firm business life cycle?

A

entry, growth, consolidation and exit

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7
Q

It includes choosing the industry as a career, selecting enterprises, acquiring and organizing the necessary resources and establishing a financial base

A

Entry

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8
Q

What is the entry stage in the firm business life cycle?

A

It includes choosing the industry as a career, selecting enterprises, acquiring and organizing the necessary resources and establishing a financial base

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9
Q

It involves the expansion of the size of the business typically by purchasing or leasing additional assets or increasing the scale of the enterprises.

A

Growth

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10
Q

This stage often uses the debt capital to finance the expansion.

A

Growth

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11
Q

How can you expand the size of your business?

A

a) Purchasing or leasing additional assets

b) Increasing the scale of the enterprise

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12
Q

What is the growth stage in the firm business life cycle?

A

It involves the expansion of the size of the business typically by purchasing or leasing additional assets or increasing the scale of the enterprises.

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13
Q

In the growth stage, it uses ____ to finance the expansion.

A

Debt Capital

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14
Q

Debt reduction becomes a priority and increased efficiency is preferred to increased size.

A

Consolidation

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15
Q

What is the priority of the consolidation stage?

A

Debt Reduction

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16
Q

True or False

There is always a decrease in size in the consolidation stage

A

False. Early planning and merging of the next generation into the business, however, may allow it to continue in the growth or consolidation stage for some time without showing a decline in size.

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17
Q

What is consolidation in the firm business life cycle?

A

It is the stage where debt reduction becomes a priority and increased efficiency is preferred to increased size.

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18
Q

It is the stage wherein the firm operator nears retirement.

A

Exit

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19
Q

In the exit stage, attention turns towards three aspects, Enumerate the three aspects.

A

a) reducing risk
b) liquidating the business
c) transferring the property to the next generation

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20
Q

What is the exit stage in the firm business life cycle?

A

It is the stage wherein attention turns towards reducing risk, liquidating the business and transferring property to the next generation. It is the time when the firm operator nears retirement.

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21
Q

What are the nine groupings of enterprises based on the slides

A

a) by sectors
b) by form of ownership
c) according to organizational form
d) by field of activity
e) according to the size of the business
f) according to independence
g) based on the nature of activity
h) based on the purpose of activity
i) according to taxation

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22
Q

What are the three primary sectors?

A

primary, secondary and tertiary

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23
Q

In this sector belongs the extractive industries and agriculture

A

Primary Sector

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24
Q

In this sector belongs the manufacturing, construction, production equipment manufacturer, consumer goods manufacturer

A

Secondary Sector

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25
Q

In this sector belongs the services and trade

A

Tertiary Sector

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26
Q

What are the five groups according to form of ownership?

A

a) private
b) state-owned
c) mixed ownership
d) municipally-owned
e) other community owned such as social organizations and foundations

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27
Q

What are examples of community-owned groups?

A

social organizations and foundations

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28
Q

What are the seven classifications according to organizational form?

A

a) sole proprietorship
b) joint ventures
c) operating agreements
d) partnerships
e) corporation
f) limited liability companies
g) cooperatives

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29
Q

What are the different classification according to field of activity?

A

a) industrial
b) agricultural
c) trade
d) financial institution
e) transport
f) other

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30
Q

What are the different levels according to size of the business?

A

micro, small and medium-sized

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31
Q

In this company category, there are less than 10 employees.

A

Micro

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32
Q

In this company category, there are less than 50 employees

A

Small

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33
Q

In this company category, there are more than 50 employees but not less than 250 employees

A

Medium-sized

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34
Q

What are the different classification according to independence?

A

autonomous, partner, linked

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35
Q

In this independence classification, my enterprise holds less than 25% in another or another enterprise holds less than 25% of mine.

A

Autonomous Enterprise

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36
Q

In this independence classification, my enterprise holds at least 25% but no more than 50% of another or another enterprise holds at least 25% but no more than 50% of mine

A

Partner Enterprise

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37
Q

In this independence classification, my enterprise holds more than 50% of the shareholders’ voting rights in another or another holds more than 50% in mine

A

Linked Enterprises

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38
Q

What are the three classification according to nature of activity?

A

producer, service provider, mixed

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39
Q

What are the two types based on the purpose of the activity?

A

profit-oriented and non-profit

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40
Q

What are the four types of classification according to taxation?

A

individual enterprises, simplified corporate taxpayers, corporate companies subject to the Corporate Tax Act, non-tax budgetary bodies

41
Q

It is the direct tax imposed by the jurisdiction on the income or capital of corporations

A

Corporate Tax Act

42
Q

It is subject to personal income tax, self-employed persons and sole proprietorship

A

Individual Enterprise

43
Q

It has the maximum turnover.

A

Simplified Corporate Taxpayers

44
Q

What are three common forms of business organization?

A

sole proprietorship, partnership, corporation

45
Q

The owner owns and manages the business , assumes all the risks and receives profits and losses.

A

Sole Proprietorship

46
Q

In Hungarian, sole proprietorship is __________

A

Egyéni vállalkozó

47
Q

It can exist even when all the land, buildings and machinery are leased.

A

Sole Proprietorship

48
Q

True or False

Sole proprietorship requires that the owner to own any assets

A

False

49
Q

What are added to the other taxable income earned to determine the individual’s total taxable income?

A

business profits and capital gains

50
Q

What are the advantages of sole propiertorship?

A

freedom, make quick decisions

51
Q

True or False

All losses and business profits belong to the sole proprietorship

A

True

52
Q

The sole proprietor relies on his or her _____

A

judgment

53
Q

True or False

Owners of sole proprietorship are personally liable for any legal difficulties and debts related to the business.

A

True

54
Q

In sole proprietorship, creditors have the legal right to attach the assets of the business and _____ of the owner to fulfil unpaid financial obligation

A

personal assets

55
Q

Can creditors use the sole proprietor’s personal assets for any unpaid financial obligation?

A

Yes

56
Q

What are the disadvantages of sole proprietorship?

A

limited capital, difficulty to compete, management abilities may be insufficient, use of personal assets for financial obligation

57
Q

When can creditors have the right to acquire the personal assets of the sole proprietor?

A

business failure

58
Q

Why is it difficult to compete in the global market if you are a sole proprietor?

A

There is a limited amount of capital and probably resources that can keep with the demands of the society.

59
Q

This allows two or more operators to combine their respective abilities and assets to achieve the levels of efficiency and other goals that might be unattainable on their own

A

Joint Ventures

60
Q

What are the 5 types of joint ventures?

A

operating agreements, partnerships, corporations, limited liability companies, cooperatives

61
Q

What is the primary advantage of joint ventures over sole proprietorship?

A

combining capital and management

62
Q

Why is a joint venture more efficient than combining two or more small businesses?

A

It allows a larger business to be formed

63
Q

Why does a joint venture allow a greater chance to increase the business?

A

Joint ventures increase the amount of credit available.

64
Q

How can the total supply of management and labor increase in a joint venture?

A

In a joint venture, you can combine all the capabilities of all the members.

65
Q

How does a joint venture allow specialization?

A

You can divide the management efforts with one person specializing in one area of the business such as production, investment, marketing or accounting.

66
Q

It is a type of joint venture that allows an association of one or more persons who share the ownership of a business to be conducted for profit.

A

Partnerships

67
Q

What are the two categories of partnerships?

A

limited partnerships and general partnerships

68
Q

In this category of partnership, there must be one general partner but can have an unlimited number of limited partners.

A

Limited Partnership

69
Q

They cannot participate in the management of the business.

A

Limited Partners

70
Q

Their financial liability for partnership is limited only to the actual investment in the partnership.

A

Limited Partners

71
Q

What are the three basic characteristics of a partnership?

A

a) sharing of business profits and losses
b) shared control of property with the possibility of shared ownership
c) shared management of business

72
Q

What are the six business arrangement of a partnership?

A

a) joint ownership of assets in the partnership capital account
b) operation under a firm name
c) a joint bank account
d) a single set of business records
e) management participation of all parties
f) sharing of profits and losses

73
Q

Why is a partnership easier and cheaper to form than a corporation?

A

It requires more records than a sole proprietorship but not as many as a corporation.

74
Q

Why is a partnership a flexible form of business organization?

A

A partnership allows many types of arrangements included in a written agreement.

75
Q

What is the disadvantage of a general partner compared to a limited partner?

A

The liability of a general partner can extend even to their personal assets in the case of any unpaid financial obligation.

76
Q

Who can claim a partner’s personal assets?

A

Creditor

77
Q

What are the three disadvantages of a partnership?

A

a) a partner can act individually in the partnership for legal and financial transactions
b) too many partners or an unstructured management system can create problems
c) sharing of management decisions and loss of personal freedom can be a potential source of conflict

78
Q

It is a legal entity that must be formed and operated in accordance with the laws of state.

A

Corporation

79
Q

What makes a corporation different from partnerships?

A

In a corporation, there is a legal “person” that is separate and apart from its owners, managers and employees.

80
Q

What are the three individuals involved in a corporation?

A

a) shareholders (owners)
b) directors
c) officers (operative managers)

81
Q

They own the corporation.

A

Shareholders

82
Q

What is issued to the shareholders?

A

Stock Certificates

83
Q

Stock certificates are issued to the shareholders in exchange for ______ or ______ transferred to the corporation.

A

Property, Cash

84
Q

They are elected by shareholders at an annual meeting and usually holds office for 4-5 years

A

Directors

85
Q

They are responsible to the shareholders for the management of the business.

A

Directors

86
Q

They are elected by the board of directors.

A

Officers

87
Q

They are responsible for the day-to-day operation of the business within the guidelines established by the board.

A

Officers

88
Q

What are the advantages of a corporation?

A

a) provides a limited liability for all the shareholders or owners
b) personal assets of the shareholders cannot be attached by creditors to meet financial obligation
c) convenient way to divide and transfer business ownership
d) sharing of stocks can easily be purchased, sold or given as gifts
e) transferring stocks does not reduce the size of the business

89
Q

How much does the limited liability of a corporation cover for the shareholder or owner?

A

The shareholders are only legally responsible only to that extent of the capital they have invested in the corporation.

90
Q

What are the three disadvantages of a corporation?

A

a) costly to form and maintain
b) legal fees are necessary in organizing a corporation
c) all the minutes of the meeting and annual reports must be filed with the state

91
Q

How much is the legal fee to form a corporation in Hungary?

A

5 million HUF

92
Q

It resembles a partnership but offers its members the advantage of limited liability.

A

Limited Liability Company

93
Q

What makes the liability of an LLC different from the liability of corporation?

A

Creditors can pursue the assets of LLC but cannot go after personal or business assets owned individually by its members.

94
Q

True or False

Limited Liability Companies (LLC) can include any number of members that can participate in management.

A

True

95
Q

Ownership in LLC is distributed according to the __________ contributed, as in partnership.

A

fair market value of assets

96
Q

What is LLC?

A

Limited Liability Companies

97
Q

They are made up of independent persons who wish to carry out one particular operation jointly.

A

Cooperatives

98
Q

In a cooperative, who can enjoy limited liability on contributions?

A

Members who contribute capital

99
Q

How many votes does the members of a cooperative have?

A

Only ONE VOTE each regardless of how much they own the cooperative.

Introduction to Business (3 decks)

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