Econ: Ch. 3 Vocabulary – Flashcards
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sole proprietorship
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unincorporated business owned and run by a single person who has rights of all profits an unlimited liability for all debts of the firm
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unlimited liability
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requirement that an owner is personally and fully responsible for all losses and debts of a business
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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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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 partners
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partnership
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unincorporated business owned and operated 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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general partnership
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form of partnership where all partners are equally responsible for management and debts
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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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corporation
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form of business organization recognized by law as a separate legal entity with all the rights and responsibilities of an individual, including the right to buy and sell property, enter into legal contracts, sue and be sued
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charter
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written government approval to establish a corporation; includes company name, address, purpose of business, number of shares of stock, and other features of the business
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stock
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certificate of ownership in a corporation
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stockholder
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person who owns a share or shares of a stock in a corporation
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dividend
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check paid to stockholders, usually quarterly, representing portion of corporate profits
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common stock
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most common form of corporate ownership, with one vote per share for stockholders
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preferred stock
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form of stock without vote, in which stockholders get their investments back before common stockholders
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bond
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formal contract to repay borrowed money and interest on the borrowed money at regular future intervals
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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 the use of borrowed money; usually paid at periodic intervals for long-term bonds or loans
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double taxation
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feature of taxation that allows stockholders' dividends to be taxed both as corporate profit and as personal income
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merger
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combination of two or more business enterprises to form a single firm
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income statement
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report showing a business's sales, expenses, and profits for a certain period, usually three months or a year
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net income
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measure of business profits determined by subtracting all expenses, including taxes, from revenues
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depreciation
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gradual wear on capital goods
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cash flow
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total amount of new funds the business generates from operations; broadest measure of profits for a firm, includes both net income and non-cash charges
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horizontal merger
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combination of two or more firms producing the same kind of product
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vertical merger
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combination of firms involved in different steps of manufacturing or marketing
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conglomerate
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firm with four or more businesses making unrelated products, with no single business responsible for a majority of its sales
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multinational
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corporation producing and selling without regard to national boundaries and whose business activities are located in several different countries
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nonprofit organization
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economic institution that operates like a business but does not seek financial gain; schools, churches, community service organizations
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cooperative or co-op
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nonprofit association performing some kind of economic activity for the benefit of its members
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credit union
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nonprofit service cooperative that accepts deposits, makes loans, and provides other financial services
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labor union
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organization that works for its members' interests concerning pay, working hours, health coverage, fringe benefits, other job related matters
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collective bargaining
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process of negotiation between union and management representatives over pay, benefits, and job-related matters
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professional association
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nonprofit organization of professional or specialized workers seeking to improve working conditions, skill levels, and public perceptions of its profession
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chamber of commerce
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nonprofit organization of local businesses whose purpose is to promote their interests
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Better Business Bureau
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business-sponsored nonprofit organization providing information on local companies to consumers
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public utility
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company providing essential services such as water and electricity to consumers; usually subject to some government regulations
