Session 2: Nature and Forms of Business Organizations

Question 1

an organization or economic system where goods and services are exchanged for one another or for money

Answer 1

Business

Question 2

also known as an enterprise, agency, or a firm, is an entity involved in the provision of goods and/or services to consumers

Answer 2

Business

Question 3

can refer to an organization or to an entire market sector

Answer 3

Business

Question 4

an entity formed for the purpose of carrying on commercial enterprise

Answer 4

Business Organization

Question 5

The use of property bears a social function, and all economic agents shall contribute to the common good. Individuals and private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish, and operate economic enterprises, subject to the duty of the State to promote distributive justice and to intervene when the common good so demands. (1987 Philippine Constitution, Art. XII)

Answer 5

Section 6

Question 6

renders to its clients in exchange for a fee

Answer 6

Services

Question 7

engaged in the purchase and sale of goods and earns profit by adding a mark up to the cost of goods it is selling

Answer 7

Merchandising

Question 8

raw materials are transformed to finished goods that are sold at a price

Answer 8

Manufacturing

Question 9

owned by one person and operates for their benefit. The owner may operate the business alone or with other people

Answer 9

Sole Proprietorship

Question 10

simplest organization to form

Answer 10

Sole Proprietorship

Question 11

no legal distinction between the owner and the business

Answer 11

Sole Proprietorship

Question 12

decision-making is centralized

Answer 12

Sole Proprietorship

Question 13

life of the business ends when owner dies

Answer 13

Sole Proprietorship

Question 14

can provide protection and peace of mind while allowing you to remain a sole proprietor

Answer 14

Business Insurance Policy

Question 15

Single/sole proprietorships are registered with the __________ __ _____ ___ ________

Answer 15

Department of Trade and Industry

Question 16

owned by two or more people

Answer 16

Partnership

Question 17

has unlimited liability for the debts incurred by the business

Answer 17

Partnership

Question 18

main purpose is the pooling of resources

Answer 18

Partnership

Question 19

no legal distinction between the business and the owner

Answer 19

Partnership

Question 20

based on legal agreement or is a valid contract (a partnership agreement)

Answer 20

Partnership

Question 21

delectus personae

Answer 21

Partnership

Question 22

time should invest in developing the partnership agreement

Answer 22

Advantage of a Partnership

Question 23

there is more money available

Answer 23

Advantage of a Partnership

Question 24

more “heads” contribute to the success of the business

Answer 24

Advantage of a Partnership

Question 25

losses are shared among the partners and risk are also shared

Answer 25

Advantage of a Partnership

Question 26

planning and problem-solving are participatory

Answer 26

Advantage of a Partnership

Question 27

prospective employees may be attracted to the business. If given the incentive to become a partner

Answer 27

Advantage of a Partnership

Question 28

control of the business is shared and is thus limited

Answer 28

Disadvantage of a Partnership

Question 29

profits are shared and are thus reduced

Answer 29

Disadvantage of a Partnership

Question 30

consequences of a poor decision made by a partner affect the other partners

Answer 30

Disadvantage of a Partnership

Question 31

liability for debts is unlimited

Answer 31

Disadvantage of a Partnership

Question 32

property invested becomes join property of all

Answer 32

Disadvantage of a Partnership

Question 33

As many as __ people can join together in a partnership

Answer 33

20

Question 34

The Articles of Partnership is registered with the __________ ___ ________ which exercises regulatory power over partnerships.

Answer 34

Securities and Exchange Commission

Question 35

have limited liability and the business has a separate legal personality from its owners

Answer 35

Corporation

Question 36

can be either government-owned or privately owned

Answer 36

Corporation

Question 37

can organize either for profit or as non-profit organizations

Answer 37

Corporation

Question 38

Corporations are governed by _____ _________ ______ __ known as the Corporation Code of the Philippines.

Answer 38

Batas Pambansa Bilang 68

Question 39

A corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence

Answer 39

Sec. 2. Corporation Defined

Question 40

corporation exists as an artificial person It is called artificial because it is created by virtue of law, BP 68, unlike natural persons who come into existence by birth. As a person, it has a personality that is separate and distinct from that of the stockholders or owners. Also as a person, it has rights that are given it also by the corporation code

Answer 40

Corporate Personality

Question 41

a stockholder may sell his/her share of stocks and all the rights pertaining to the shares are transferred to the buyer of those shares. When the stockholder dies, the shares are transferred to his/her heirs

Answer 41

Power of Succession

Question 42

a corporation may file a case by itself. By the same vein, a case may be filed against it in its own name. Since it is an artificial being, it will be represented by its officers

Answer 42

The Right to Sue and be Sued in the Corporate Name

Question 43

since the corporation has a separate personality from that of its stockholders, it also has a separate liability from them. Meaning, if the corporation suffers loss and liability, only the properties of the corporation will be used to pay its debts and creditors.

Answer 43

Separate Liability that of Stockholders

Question 44

capital is divided into shares and is authorized to distribute surplus profit to its owners called stockholders. A stockholder is entitled to votes equivalent to the number of his shares

Answer 44

Stock Corporation

Question 45

capital is not divided into shares; are prohibited from distributing any surplus profit to its owners

Answer 45

Non-stock Corporation

Question 46

Where to register stock or non-stock?

Answer 46

Securities and Exchange Commission

Question 47

Requirements of Corporation Registration

Answer 47

1. at least 5 incorporators who are natural persons 2. legal of age 3. have the capacity to contract

Question 48

capital is easily raised

Answer 48

Advantages of a Corporation

Question 49

liability for debts of the business is limited to your share capital

Answer 49

Advantages of a Corporation

Question 50

tasks need to be done by the owners but by hired employees

Answer 50

Advantages of a Corporation

Question 51

owners, without approval of the board of directors, can't do major decisions

Answer 51

Disadvantages of a Corporation

Question 52

corporate and individual profits, int he form of dividends, are separately taxed

Answer 52

Disadvantages of a Corporation

Question 53

more rules and regulations to comply with

Answer 53

Disadvantages of a Corporation

Question 54

more expenses are involved

Answer 54

Disadvantages of a Corporation

Question 55

a group of individuals, elected to represent shareholders

Answer 55

Board of Directors

Question 56

establish policies for corporate management and oversight, making decisions on major company issues

Answer 56

Board of Directors

Question 57

a business or organization owned by and operated for the benefit of those using its services

Answer 57

Cooperative

Question 58

to provide goods and services to its members and thus enable them to attain increased income and savings, investments, productivity, and purchasing power and promote among them equitable distribution of net surplus through maximum utilization of economies of scale, cost-sharing and risk-sharing without, however, conducting the affairs of the cooperative for eleemosynary or charitable purposes

Answer 58

Cooperative

Question 59

shall provide maximum economic benefits to its members, teach them efficient ways of doing things in a cooperative manner, and propagate cooperative practices and new ideas in business and management and allow the lower income groups to increase their ownership in the wealth of this nation

Answer 59

Cooperative

Question 60

The Articles of Cooperation is filed with the ____________ ____________ _________ which exercises regulatory power over cooperatives

Answer 60

Cooperative Development Authority

Question 61

capital is easily raised

Answer 61

Advantages of a Cooperative

Question 62

liability is limited

Answer 62

Advantages of a Cooperative

Question 63

more people benefit from profits earned

Answer 63

Advantages of a Cooperative

Question 64

owners may employ managers with relevant qualifications

Answer 64

Advantages of a Cooperative

Question 65

it may be tax-exempted

Answer 65

Advantages of a Cooperative

Question 66

control of the business is shared

Answer 66

Disadvantages of a Cooperative

Question 67

ideas and decisions made by the board have to be accepted by the general membership

Answer 67

Disadvantages of a Cooperative