midterm - chapter 5 Flashcards
businesses that get supplies from other producers and convert them into products, they sell their products to consumers and other businesses
manufacturers
ex. cereal maker, computer company
a business owned and controlled by just one person
sole proprietorship
a specific statement of results the business expects to achieve
goal
business that complete activities that are consumed by customers rather than offering products for sale
service businesses
a business owned and controlled by two or more people who have entered into a written agreement
partnership
businesses involved in selling the goods and services of producers to consumers and other businesses
intermediaries
ex. storage center, advertising agency, Macy’s, Target
a written contract granting permission to operate a business to sell products and services in a prescribed way
franchise
guidelines used in making consistent decisions
policies
What are the pros and cons of corporation?
- pros: owners are employees so not responsible for any lawsuits or debt
- cons: difficult to start, must meet more legal requirements, not all owners have decision making privledge, only board of directors decide how profits are shared
The people who make the major policy and financial decisions in a corporation are the
- investors
- board of directors
- managers
- owners
board of directors
a business owned and controlled by 2 or more people who have entered into an agreement
partnership
What are the pros and cons of a franchise?
- pros: don’t have to come up with logo, brand name, or products; can expand using investments made by other people
- cons: large initial capital required, no freedom for creativity, must buy products from franchiser which can be expensive, franchisee receives business profits
a short, specific written statement of the reason a business exists and what it wants to accomplish
mission statement
The form of ownership that gives one person sole control over all business decisions is the
- proprietorship
- partnership
- corporation
- franchise
proprietorship
- a group of people who oin to do some activity that benefits the public
- they work in areas such as education, health care, charity or the arts
nonprofit corporation
- offers the limited liability of a corporation
- all income is passed through to the owners based ontheir investment and is taxed on their individual tax returns
S-corporation
What are the pros and cons of sole proprietorship?
- pros: easy to start, total control over business, receives all profits, tax benefits
- cons: have to do it all on your own, can be sued, responsible for debts if the business fails
a written agreement among all owners that specifies the rules and procedures that guide ownership and operations
partnership agreement
the people who make the major policy and financial decisions for a corporation
board of directors
businesses involved in selling the goods and services of producers to consumers and other businesses
intermediaries
a business carries out activities that are consumed by its customers
service business
ex. dentists, physicians, lawyers, painters, movers, internet service providers
What is the size of a typical American business?
- most US businesses are very small
- most businesses have no employees other than the owner
a written legal document that identifies ownership and operating procedures and conditions for the business
articles of incorporation
What are the roles of busineses in the US economy?
- the most important role of busineses is to make and distribute products and services needed by consumers, government and other businesses
- businesses provide employment for millions of people
- employee wages are then used to purchase goods and services
- profits earned by businesses are used to compensate owners and investors
- businesses pay taxes to federal, state and local governments
- government then spend these taxes to provide services such as clean water, well maintained streets, police, hospitals and schools
