Understanding Business Chapter 5 – Flashcards
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Sole Proprietorship
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A business that is owned, and usually managed, by one person.
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Partnership
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A legal form of business with two or more owners.
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Corporation
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A legal entity with authority to act and have liability separate from its owners.
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Unlimited Liability
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Responsibility of business owners for all of the debts of the business.
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General Partnership
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A partnership in which all owners share in operating the business and in assuming liability for the business's debts.
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Limited Partnership
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A partnership with on or more general partners and one or more limited partners.
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General Partner
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An owner/partner who has unlimited liability and is active in managing the firm.
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Limited Partner
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An owner who invests money in the business but doesn't have any management responsibility or liability for losses beyond investment.
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Limited Liability
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Responsibility of a business's owners for losses only up to the amount they invest; (limited partners and shareholders)
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Limited Liability Partnership (LLP)
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Partnership that limits partners' risk of losing their personal assets to only their own acts and omissions and to the acts and omissions of people under their supervision.
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Convential (C) Corporation
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State-chartered legal entity with authority to act and have liability separate from its owners.
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S Corporation
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Unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships.
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Merger
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Result of 2 firms forming 1 company.
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Acquisition
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1 company's purchase of property and obligations of another company.
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Vertical Merger
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Joining of 2 companies involved in different stages of related businesses.
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Horizontal Merger
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Joining of 2 firms in same industry.
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Conglomerate Merger
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Joining of firms in completely unrelated industries.
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Leveraged Buyout (LBO)
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An attempt by employees, management, or a group of investors, to purchase an organization primarily through borrowing.
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Franchise Agreement
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Agreement whereby someone with a good idea for a business sells the rights to use the business name and sell a product or service to others in a given territory.
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Franchisor
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Company that develops a product concept and sells others the rights to make and sell the products.
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Franchise
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Right to use a specific business's name and sell its products or services in a given territory.
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Franchisee
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Person who buys a franchise.
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Cooperative
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Business owned and controlled by the people who use it--producers, consumers, or workers with similiar needs who pool their resources for mutal gain.
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Limited Liability Company
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A company similar to an S corporation but without the special eligibility requirements.
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Master Limited Partnership (MLP)
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A partnership that looks much like a corporation (in that it acts like a corporation and is traded on a stock exchange) but is taxed like a partnership and thus avoids the corporate income tax.
