Economics Ch. 3 Quiz: Business Organizations – Flashcards
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What are the three major forms of business organizations?
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-Corporation -Parternship -Sole Proprietorship
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What are the advantages of a sole proprietorship?
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-BPIOT -You're your own BOSS. -All PROFIT is yours. -You can easily get IN or out of the business. -There are huge tax breaks involved.
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What are the disadvantages of a sole proprietorship?
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AUL - UNLIMITED liability - ABILITY to raise excess revenue -Limited LIFE
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How is a partnership created?
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two or more partners join together and combine their abilities
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What are the advantages of a partnership?
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GCFT -GREATER Specialization -Some CONTROL -Greater amount of FINANCIAL power -Huge TAX breaks involved
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What are the disadvantages of a partnership?
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LGL -LIABILITY Struggles (when contract not well organized) -GETTING along with your partners -Limited LIFE
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How is a corporation created?
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when people buy shares in a company
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A corporation usually includes a _________ shareholder.
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majority
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What are the advantages of a corporation?
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RULS -Much better ability to raise REVENUE -UNLIMITED life -LIMITED liability -Incredible ability to SPECIALIZE
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What are the disadvantages of a corporation?
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DT, MS, PD -Double Taxation -Not much control if not a Majority Stockholder - Profits determined by stocks and dividends
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General Partnership
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Both partners are involved in the day-to-day management of business and financial needs.
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Limited Partnership
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Only one partner is involved in the day-to-day management of business needs and financial needs.
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S-Corporation
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a way in which small corporations can gain the tax breaks of a sole proprietorship with the organization of a corporation
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Charter
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the constitution for a business; legal document that sets up a business
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Stock
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share of ownership
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Stockholder
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simply, people who own stock
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Dividend
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Share of the profits of a company
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Bond
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the way a business borrows money
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Secured Bond
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a bond guaranteed by colatterals; guaranteed of getting money back
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Unsecured Bond
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a bond not guaranted by colatterals; no guarantee of getting your money back
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Depreciation
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resources you have to use up to produce what you're producing
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Merger
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companies join together
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Vertical Merger
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one company owns everything from the ground up; ex. McD's owning from the potato farms to the manufacturers to the restaurant itself
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Horizontal Merger
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one company buys out its competitors
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Conglomerate
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buying unrelated businesses; ex. Yamaha
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Cooperative
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ex . Costco, Sam's Club
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Credit Union
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You're an owner and member in the bank.
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Name 4 organizations that help consumers and communities with business problems.
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ABCC -Attorney General's Office -Corporate Office -Consumer Affairs -Chamber of Commerce
