Economics Chptr. Seven – Flashcards
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What Great risk balances out the many advantages of both sole proprietorship and other models?
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Limited availability of money
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Many law and accounting firms use which advantage of partnership?
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Greater retention of competent employees
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What is the primary advantage of partnerships over sole proprietorship?
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Greater financial resources
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What questions do the partnerships answer?(pg. 132)
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Who are the partners? What is each partner responsible to do? How are profits to be divided? How may a partner withdraw from the partnership? How can the partnership be dissolved?
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What book of the bible gives much advice about personal financial practices?
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Proverbs
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In the eyes of the law a corporation possesses which two qualities?
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Individuality immortality
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What is the chief advantage of incorporating a company?
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Limited personal financial liability
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Which statement best summarizes J C Penney's business philosophy?
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The golden rule
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A business with fewer than 35 shareholders can incorporate as?
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S corporation
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According to the text which disadvantage results from large corporations?
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Impersonality
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Which is an accurate criteria for an LLC?
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Can be established by a single person No more than 35 shareholders No board of directors No bylaws
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According to the text organizations accuse corporations of not being able to...
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React to the market changes
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Creditor
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A person or bank who lends money
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Stock
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A share of the value of a company which can be bought, sold, or traded as an investment
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Surety
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someone who agrees to be legally responsible if another person fails to pay a debt or to perform a duty
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Limited partner
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a partner in a venture who has no management authority and whose liability is restricted to the amount of his or her investment
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CEO
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the person who has the most authority in an organization or business
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Cosiner
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A person that promises to grant a loan to someone with inadequate credit if another more credit worthy person will also sign the note promising to pay if the original borrower cannot
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What percent of businesses fail in the first year(128)
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25%-30%
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Partnerships require written contract(131)
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False
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What type of lifespan does a sole proprietorship have?(133)
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Limited
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Name the three types of business firms
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Sole proprietorship Partnership Corporation
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Name the two types of partnerships 131;134
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Limited partnerships and general partnerships
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Name two types of corporation 136
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Private Public
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List the two main tax disadvantages of corporation 138
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Higher taxes Double taxation of earnings
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Type of business that is most open to governmental regulation
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Corporation
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What universal human problems leads to some of the disadvantages of partnerships? 133
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Man's sin nature
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What two advantages do corporations have in raising financial capital?
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Unlimited number owners so able pay back debts Lending institutions see higher caliber management
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Which type of business do the bible's cautions about surety most directly apply?
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Partnerships
