Chapter 8 Free Enterprise – Flashcards
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What is the most common form of a business organization in the US?
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Sole Proprietorships
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What percentage of all businesses in the US are sole proprietorships, according to the IRS?
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75%
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Are most sole proprietorships large, medium, or small in size of revenue generation? What percentage of US sales do sole proprietorships generate?
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Small- only 6%
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What is the most popular type of firm in the US?
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Sole Proprietorship
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Is a sole proprietorship easy to establish?
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Yes
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__ __-__ is one of the main advantages of a sole proprietorship.
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Easy Start-up
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Just about anyone can start a sole proprietorship if your are willing to complete a small amount of __ and pay the __ expense to start the business.
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Paperwork, legal
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The paperwork only takes a __ or __ to complete.
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Day, two
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Sole proprietorships typically must meet three minimum requirements:
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Authorization (business license), site permit, name of business
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What form of business is the least regulated?
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Sole Proprietorship
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Name two kinds of regulations that a sole proprietorship might subject to follow:
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Health codes, zoning laws
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Who gets to keep all of the profits (after taxes) in a sole proprietorship?
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The owner of the business
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How does the ability to make fast, flexible decisions benfit a sole proprietor?
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It allows them to take full advantage of sudden opportunities
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If a sole proprietor wants to discontinue their business, they must first: a) pay any __ b) any other obligations like __
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debts, taxes
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List three major disadvantages of sole proprietorships:
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Unlimited personal liability, limited access to resources, lack of permanence
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an estaqblishment formed to carry on commercial enterprise
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Business organization
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a business owned and managed by a single individual
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sole proprietorship
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authorization to start a business issued by the local government
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business license
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law in a city or town that designates separate areas for residency and for business
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zoning laws
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the legally bound obligation to pay any debts
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liability
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payment other than wages or salaries
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fringe benefit
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a business owned by two or more persons who agree on a specific division of responsibilities and profits
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partnership
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partnership in which partners share equally in both responsibility and liability
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general partnership
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partnership in which only one partner is required to be a general partner
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limited partnership
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partnership in which all partners are limited partners
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Limited Liability Partnership (LLP)
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a partnership agreement
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articles of partnership
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act ordering common ownership interests, profit and loss sharing, and shared management responsibilities in a partnership
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Uniform partnership act (UPA)
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money and other valuables belonging to an individual or business
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assets
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a legal entity owned by individual stockholders
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corporation
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a certificate of ownership in a corporation
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stock
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a formal contract to repay borrowed money with interest at fixed intervals
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bond
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the portion of corporate profits paid out to stockholders
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dividend
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the combination of two or more firms involved in different stages of producing the same good or service
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vertical merger
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share of earnings given as a payment
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royalties
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retail outlet owned and operated by consumers
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consumer cooperative
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cooperative that provides a service, rather than a good
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service cooperative
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agricultural marketing cooperative that helps members sell their products
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producer cooperative
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institution that functions much like a business, but does not operate for the purpose of generating profits
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nonprofit organization
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nonprofit organization that works to improve the image, working conditions, and skill levels of people in particular occupations
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professional organization
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nonprofit organization that promotes collective business interests for a city, state, or other geographical area, or for a group of similar businesses
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business association
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nonprofit organzation that promotes the interests of a particular industry
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trade association
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Partnerships agree on a specific __ of __ and __.
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division, responsbility, profits
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In the US, partnerships account for about __ percent of all business.
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7
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Partnerships generate about __ percent of all sale and about __ percent of all income
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5, 10
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What is the most common type of partnership?
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General Partnership
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In a limited liability partnership __ partners are limited partners.
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all
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What are the four most common types of LLPs?
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Attorneys, physicians, dentists, accountants
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Limited liability partners are not usuall liable for other partner's __.
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Mistakes
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How does a corporation differ from a sole proprietorship or partnership?
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Corporations continue after the death of their owners and are owned by shareholders
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How does a business franchise work?
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It pays fees to a parent company in order to sell its goods in a specific area
