Economics: Principles And Practices, Chapter 3 Test Questions – Flashcards
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sole proprietorship
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unincorporated business owned and run by a single person who has rights to all profits and unlimited liability for all debts of the firm; most common form of business organization in the United States
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unlimited liability
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requirement that a owner is personally and fully responsible for all losses and debts of a business; applies to proprietorships, general partnerships
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inventory
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stock of goods held in reserve; includes finished goods waiting to be sold and raw materials to be used in production
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fringe benefit
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benefit received by employees in addition to wages and salaries; may include paid vacations, sick leave, retirement, insurance
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limited life
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situation in which a firm legally ceases to exist when an owner dies, quits, or a new owner is added, applies to sole proprietorships and partnerships
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partnership
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unincorporated business owned by two or more people who share the profits and have unlimited liability for the debts and obligations of the firm; same as general partnership
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general partnership
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unincorporated business owned by two or more people who share the profits and have unlimited liability for the debts and obligations of the firm
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limited partnership
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form of partnership where one or more partners are not active in the daily running of the business, and whose liability for the partnership's debt is restricted to the amount invested in the business
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limited liability
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the personal assets of stockholder are not at stake if the corporation defaults on its debts
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corporation
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a legal creation that can acquire resources, own assets, produce and sell products, incur debts, extend credit, sue and be sued
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charter
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written government approval to establish a corporation
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stock
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certification of ownership in a corporation
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stockholder
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person who owns a share or shares of stock in a corporation (same as shareholder)
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shareholder
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person who owns a share or shares of stock in a corporation (same as stockholder)
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dividend
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check paid to stockholders, usually quarterly, representing portion of corporate profits
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proxy
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ballot allowing a shareholder's representative to vote on corporate matters
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bond
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a lend of money to a corporation, an IOU (no ownership)
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principal
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amount borrowed when getting a loan or issuing a bond
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interest
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payment made for use of borrowed money; usually paid at periodic intervals for long-term bonds or loans
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organizational chart
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visual representation of a company's structure showing how different parts of the organization are related
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bankruptcy
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court-granted permission to an individual or business to cease or delay payment on some or all debts for a limited amount of time
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unlimited life
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condition of continued legal existence of a corporation when an owner dies, sells, or transfers ownershiop
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double taxation
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when stockholders dividends are taxed twice once as corp and again as perso
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merger
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a combination of 2 or more businesses to form a single firm
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income statement
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a report showing a business's sale, expenses and profits for a certain period
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net income
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you find this by subtracting all of its expenses including taxes, from its revenues
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deprication
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a non-cash charge the firm takes for a the general wear and tear on its capital goods
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cash flow
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the sum of net income and non-cash charges , its the real profits for the business
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horizontal merger
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this is when 2 firms come together that are of the products
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vertical merger
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where multiple firms join that do diff steps of manufactoring
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conglomerate
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4 or more firms that work together but have nothing to do with each other (diff products)
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multinational
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a corporation that has manufacturing or service operations in a #of diff countries
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nonprofit organization
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operates in a businesslike way to promote the collective interests of its members rather than to seek financial gain for its owners
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cooperative
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non profit organization, a voluntary association of people formed to carry on some kind of economic activity that will benefit its members 3 major classes-consumers, service producer
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credit union
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a financial organization that accepts deposits from and makes loans to employees of a particular company or gov agency
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labor union
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an organization of workers formed to represent its members interests in various employment matters
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collective bargaining
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when you negotiate with management over issues such as pay, hours,heal care
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professional association
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a group of people in a specialized occupation that works to improve the working conditions, skill levels and public perceptions of the profession
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chamber of commerce
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promotes the welfare of its members and the community does a lot of sponsering
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better business bureau
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a non profit organization sponsored by local businesses to provide general info about companies
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public utilites
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investors=or municipal-owned companies that offer important products to the public such as water or electricity
