Test 1 Flashcards
The means for comparing agricultural business organizations include all of the following
resource acquisition, continuity of existence, liability of the owners
The major difference between a “C” and “S” corporation is:
The way taxes are handled
Since WWII agriculture has become:
More specialized in production, less dependent on human labor, more dependent on the rest of the economy, less dependent on the inputs produced on the farm
Future of agribusiness includes the following:
futher consolidation and concentration throughout the vertical marketing system, use of information technology to lower the transaction costs, bio-technology in not only in plant area but also in animal sector, e.g. breeding, niche marketing and brand identification.
The major advantages of corporation are
perpetual life, treated as a legal person, profits taxed at corporate tax rate, can separate corporate asset from personal asset
a mjaor advantage of a limited liability corporation (LLC) is
no tax as a business
The limited Liability partnership
is another name for the limited partnership
What is the maximum number of shareholders allowed in an S corporation?
100
Accord to the textbook, the benefits of Incorporation (creating a corporation) for small agribusiness entities include
limited personal liability
continuity of operation
estate planning
According to your textbook, the three types of partnerships include
limited partnership
registered limited liability partnership
general partnership
agricultural input sector would include
farmers, agricultural financing
the production sector would include
ranchers
the processing-manufacturing sector would include
food processing
How much do we produce as a country?
12% agricultural output
How much do we export?
27% of US production
how many people can each farmer feed?
114 people
The vertical stages of the agribusiness system
Farm input supplies farm production food processing food wholesaling food retailing
average farm
equals more than 400 acres and over $450,000 in assets
The processing - manufacturing sector has
over 5 million workers and 600,000 outlets
Largest share of US Farm expenditures
Crop Sector
Sole proprietorship
a business owned and managed by one individual
Advantages of a Sole Proprietorship
Simple to create
least costly
profit incentive
Total decision making authority
Disadvantages of a Sole Proprietorship
Unlimited personal liability
Limited skills and capability
feelings of isolation
limited access to capital
Partnership
as association of two or more people who co-own a business for the purpose of making profits
governed by the uniform partnership act
The three types of partnerships include
ordinary (general) partnership
Limited Partnership
registered limited liability partnership
General Legal Characteristics of a Partnership
Participation in management decisions joint ownership of assets profits/losses are shared Firms name Joint bank account Single set of business records
Written Partnership Agreements
Control in business decisions
Control over real and personal property
Partnership Advantages
easy to establish complementary skills Division of profits Taxation Capital Accumulation
Partnership Disadvantages
unlimited liability of at least one partner
lack of continuity
difficulty in disposing of partnership
Corporation
A separate legal entity apart from its owners which receives its right to exist from the state in which it is incorporated
Types of Corporation
Business corporation (sub-chapter C corporation)
Nonprofit corporation
Close Corporation
Professional corporation
Certificate of Incorporation
Corporations Name Statement of purpose Time horizon names and addresses place of business capital stock authorization capital required at the time of incorporation restrictions on transferring shares
Corporation Advantages
Limited Liability of the Stockholders
Ability to Attract capital
Corporation Disadvantages
Cost and time involved in incorporation process
double taxation
