economics chapter 3 quiz – 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
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proprietorship
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a business owned by a single individual
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unlimited liability
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the owner is personally and fully responsible for all losses and debts of the business
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inventory
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a stock of finished goods and parts in reserve
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limited life
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the firm legally ceases to exist when the owner dies, quits, or sells the business
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partnership
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a business that is jointly owned by two or more persons
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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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at least one partner is not active in the daily running of the business
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corporation
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a form of business organization recognized by law as a separate legal entity with all the rights of an individual
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charter
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a government document that gives permission to create a corporation
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stock
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ownership certificates in the firm
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stock holders
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own part of the corporation
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dividend
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a check that transfers a portion of the corporate earnings to each stock holder
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common stock
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represents basic ownership of a corporation
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preferred stock
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nonvoting ownership shares of corporation
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bond
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a written promise to repay the amount borrowed at a later date
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principal
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the amount borrowed
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interest
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the price paid for the use of another's money
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double taxation
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the stockholder are taxed twice
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merger
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a combination of two or more businesses to form a single firm
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income statement
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a report showing a businesses sales, expenses, net income and cash flows for a period of time
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net income
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the funds left over after all of the firm's expenses including taxes
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depreciation
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a non-cash charge the firm takes for 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
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horizontal merger
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when firms that produce the same kind of product join forces
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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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a firm that has at least four businesses
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multinational
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a corporation that has manufacturing or service operations in a number of different countries
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nonprofit organization
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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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voluntary association formed to carry on some kind of economic activity that will benefit its members
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credit union
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financial organization that accepts deposits from, and make loans to, employees of a particular company or government 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 it negotiates with management over issues such as pay, working hours, health care coverage, vacations, and other job related matters
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professional association
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consists of people in a special occupation interested in improving the working conditions, skill levels, and public perceptions of the profession
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chamber of commerce
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an organization that promotes the welfare of its member businesses
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Better Business Bureau
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as a nonprofit organization sponsored by local businesses
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public utility
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municipal or investor owned companies that offer products such as water, sewage, and electric service to the public
