question

1) sole proprietorship 2) partnership 3) corporation 4) limited liability company

answer

what are the big 4 business ownership options?

question

sole proprietorship

answer

the business is owned by a single individual

question

partnership

answer

two ore more people serve as co-owners of the business

question

corporation

answer

the business is a legal entity, separate from its owners *articles of incorporations must be filed and corporate bylaws adopted

question

limited liability company

answer

a hybrid with characteristics of both a corporation and partnership

question

1) sole proprietorships 2) corporations 3) partnerships

answer

order of the total number of business by form of ownership (from biggest to smallest)

question

1) corporations 2) partnerships 3) sole proprietorships

answer

order of the total net income by form of ownership (from biggest to smallest)

question

corporate, 66

answer

____________ form of ownership reports _____% of profits representing only 18.3% of all entities

question

general partnership

answer

a type of partnership in which all partners can take an active role in managing the business and have unlimited liability for any claims against the firm

question

articles of incorporation

answer

the document filed with a state government to establish the existence of a new corporation

question

limited liability

answer

when owners are not personally liable for claims agains their firm, owners may lose their investment in the company but their own personal assets are protected

question

billions, 25,000

answer

corporations like Walmart, Exxon, Apple, and GE have annual sales revenues in the _______ of dollars, BUT 24% of all corporations report revenue less than _________ dollars

question

5 advantages of a sole proprietorship

answer

1) easy formation 2) retention of control 3) pride of ownership 4) retention of profits 5) possible tax advantages

question

5 disadvantages of a sole proprietorship

answer

1) limited financial resources 2) unlimited liability 3) limited ability to attract and maintain talented employees 4) heavy workload and responsibilities 5) lack of permanence

question

4 advantages of general partnerships

answer

1) pooled financial resources 2) shared responsibility 3) easy formation 4) tax advantages

question

4 disadvantages of general partnerships

answer

1) unlimited liability 2) disagreements 3) lack of continuity 4) difficulty withdrawing

question

limited partnership

answer

includes at least one general partner and at least one limited partner

question

limited

answer

__________ partners in a limited partnership cannot participate in management of the partnership but do have limited liability

question

limited liability partnership

answer

all partners are actively involved but they have some form of limited liability, the amount of liability differs per state

question

general, limited

answer

family limited partnerships with parents as _________ partners and children as ________ partners, parents transfer assets to children while still managing to control and they reduce gift and inheritance taxes and protect the family assets from creditors and lawsuits *watch out for IRS because family limited partnerships can attract tax auditors

question

1) sole proprietorships 2) general partnerships, doing business as

answer

what 2 types of businesses generally operate under their name? *they must confirm name, or similar name, is not already used and many states require a _________ __________ ___ be filed

question

corporations, bank, corporative

answer

____________ is a type of business that must be filed with the state and use special wording in their name that includes corporation, incorporated, company, limited, or an abbreviation *the words ________ or _________ CANNOT be used unless approved be a regulatory agency

question

C corporation, stockholders

answer

this is the most common type of corporation, which is a legal business entity that offers limited liability to all of its owners called ___________

question

corporation friendly

answer

requirements for this type of business vary from state to state but many states are considered ___________ ___________

question

corporate bylaws

answer

the basic rules governing how a corporation is organized and how it conducts its business

question

institutional investor

answer

an organization that pools contributions from investors, clients, or depositors and uses these funds to buy stocks and other securities

question

1) oversee operation and protect investors' interest 2) establish mission and set values 3) rarely get involved in day to day management 4) monitor performance of corporate officers

answer

what are the 4 main roles of the Board of Directors?

question

board of directors

answer

who is elected by stockholders to oversee the operation of THEIR (the stockholders') company and protect their interest

question

5 advantages of corporations

answer

1) limited liability 2) permanence 3) easy transfer of ownership 4) ability to raise capital 5) specialized management

question

5 disadvantages of corporations

answer

1) expensive and complicated formation and operation 2) double taxation 3) paperwork and regulation 4) complications when operating in more than one state 5) conflicts of interest

question

S Corp

answer

a form of a corporation that avoids double taxation because it taxed like a partnership and has limited liability BUT no more than 100 stockholders allowed and the must be US citizens or permanent residents

question

Statutory Close Corp

answer

a corporation with limited number of owners that operates under less formal rules than a C Corp. because not required to have a board or hold annual meetings and owners can participate in management while maintaining limited liability BUT limited number of stockholders, stockholders must offer shares to owners before public, not all states allow this corporation type

question

Nonprofit Corp

answer

a corporation that does not seek to earn a profit and differs in several fundamental respects from C corps because earnings are exempt from federal and state income taxes, members/ directors have limited liability, contributions made by individuals are tax deductible BUT may have dues paying members but no stockholders, cannot distribute dividends, cannot make political donations, must keep accurate records to document tax-exemption

question

CEO pay, Dodd Frank Act

answer

the recession of 2008/2009 brought that oversight into question regarding _____ ______ because they were enjoying high salaries and perks while laying off workers, congress then passed the _______ _________ ________ which gives stockholders some voice in executive compensation

question

Merrill Lynch, Stan O'Neal

answer

_______ ________ CEO named ________ __________ was ditched in 2008 for encouraging a culture of risk which let to $12 billion of losses on mortgage related securities and he took

question

mergers

answer

two companies agree to a combination of equals

question

acquisitions

answer

when one firm buys another

question

1) horizontal merger 2) vertical merger 3) conglomerate merger

answer

what are the 3 types of mergers/acquisitions?

question

horizontal merger

answer

a combination of firms in the same industry, objective to increase size and market power within the industry and improve efficiency by eliminating duplication of facilities and personnel EX: United Airlines acquisition of Continental Air in 2010

question

vertical merger

answer

a combination of firms that are at different stages in the production of a good or service creating a buyer-seller relationship, objective to provide tighter integration of production and increased control over the supply of crucial inputs EX: Google's acquisition of Motorola Mobility, a company that manufactures cell phones using Google's Android operating system

question

conglomerate merger

answer

a combination of firms in unrelated industries, objective to reduce risk by making the firm less vulnerable to adverse conditions in any single market EX: acquisition by Berkshire Hathaway (highly diversified company that holds stock in a wide variety of companies) of Iscar (cutting tools company)

question

grow, competitive advantage

answer

large corporations constantly look for ways to ______ and achieve __________ _____________

question

divestiture

answer

allow the firm to streamline their operations and focus, it is the transfer of total or partial ownership of some of a firm's operations to investors or to another company

question

spin off

answer

a common type of divestiture that occurs when a company issues stock in one of its own divisions or operating units, setting up the division or part of the business as a separate company *sell stock to existing stockholder

question

carve out

answer

a type of divestiture that occurs when a company begins setting up a separate business from an operation *sell stock to outside investors

question

4 advantages of a limited liability company

answer

1) limited liability 2) tax pass through 3) simplified management and operation 4) flexible ownership

question

5 disadvantages of a limited liability company

answer

1) complex to form 2) franchise taxes 3) foreign status in other states 4) limited to select industries 5) state law differences

question

franchise

answer

*a well established method for operating a business, a licensing arrangement under which a franchisor allows franchisees to use its name, trademark, products, business methods, and other property in exchange for monetary payments and other considerations

question

franchisse, franchisor

answer

the ___________ uses the brand name, trademark and practices of the ______________

question

franchisor

answer

the business entity in a franchise relationship that allows others to operate its business using resources it supplies in exchange for money and other considerations

question

franchisee

answer

the party in a franchise relationship that pays for the right to use resources supplied by the franchisor

question

women, minority

answer

there has been a growth in _________ franchises, __________ participation has also increased under new initiatives

question

foreign markets, more

answer

franchising in ____________ ___________ have shown great opportunities for growth, markets are less intense and less saturated, McDonald's has slightly ______ franchises in foreign countries than in the US

question

4 advantages of franchising

answer

1) less risk 2) training and support 3) brand recognition 4) access to funding

question

6 disadvantages of franchising

answer

1) cost 2) lack of control 3) negative halo effect 4) growth challenges 5) restriction on sale 6) poor execution

question

distributorship

answer

a type of franchising arrangement in which the franchisor makes a product and licenses the franchisee to sell it

question

business format franchise

answer

a broad franchise agreement in which the franchisee pays for there right to use the name, trademark, and business and production methods of the franchisor

question

nonprofit franchisees

answer

many customers like doing business with this type of business, it is a good way for companies to be socially responsible and build goodwill, can boost their fundraising efforts EX: Ben

question

franchise agreement

answer

the contractual arrangement between a franchisor and franchisee that spells out the duties and responsibilities of both parties

question

6 facts of signing a franchise agreement

answer

1) terms and conditions 2) fees and payments 3) training and support 4) specific operational requirements 5) conflict resolution 6) assigned territory

question

Francise Disclosure Document

answer

franchisor MUST provide what to potential franchisees? this is a detailed description of all aspects of a franchise that the franchisor must provide to the franchisee at least 14 calendar days before the franchise agreement is signed

question

federal trade commission

answer

the ___________ __________ ______________ requires the FDD must be written in english, franchisor must be given 14 days to review FDD, and franchisee should have a lawyer review the document

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