Business – Chapter 6

sole proprietorships
a business owned by one person
partnerships
a business owned by two or more people who share its risks and rewards
corporations
a company that is registered by a state and operate apart from its owners
Give 3 advantages of sole proprietorships
-easy to do or start
-might only need only a license or permit to start
-in charge of their own businesses
Give 3 examples of disadvantages of sole proprietorships
-no separation between personal and business debts
-owner has unlimited liability
-the sole proprietorship ends when the owner dies
define unlimited liability
responsible for company’s debt
define limited life
the company ends when the owner dies
Give 3 advantages of partnerships
-easy to start
-income taxed once
-might need only to obtain a license
easier for partnerships to obtain capital
give 3 examples of disadvantages of partnerships
-all the partners share the business risks
-ends if one owner dies (limited life)
-may not always get along with partner
what type of business organization has to obtain corporate from state ,can sell stock to raise money, and company must have board of directors?
corporations
give 3 examples of advantages of corporations
-limited liability
-the corporation does not end if an owner dies (unlimited life)
-its ability to raise money when people buy stock
define limited liability
holds a firm’s owners responsible for no more than the capital that they have invested in it
give 3 examples of disadvantages of corporations
-they pay taxes on their income
-stock holders pay taxes on profits issued them
-the government regulates corporations more than other types of business
define double taxation
income and stockholders taxed on profits issued to them
what type of business organization has double taxation
corporations
define partnership agreement
contract that outlines the rights and responsibilities of each person
Are certain businesses better suited for a certain business type/set-up?
yes, sole proprietorships are most of all businesses and corporations have the most revenue out of them all
which type of business has the most number of businesses
sole proprietorship
which type of business accounts for the most income
corporation
define unlimited life
when the business owner dies in a sole proprietorship, the business dies
define limited life
when a corporation or partnership has an owner that dies and the business doesn’t end
define limited liability
they are only responsible for the amount of money they invested in the business
define unlimited liability
when owner is responsible of the debt of the company unless they pay out of pocket for debt
if you start a business as one type of business organization, do you have to remain organized that way?
nope, can move from one to another
define franchise
contractual agreement to use the name and sell the products or services of a company in a designated geographic area
what is an example of a franchise
taco bell
you must invest money and pay ________ or a share of profits in return you get a __________ name and business plan
franchise fees
well-known
define producer
a business that gather raw goods
give examples of producers
agriculture
mining
fishing
forestry
define processor
changes raw materials into more finished products
give examples of processors
-sugar cane –> sugar
-crude oil –> gasoline
-iron ore –> steel
define manufacturer
a business that makes finished products out of processed goods
give examples of manufacturers
-cars
-CDs
-computers
define intermediary
a business that moves goods from one business to another
give examples of intermediaries
-real estate
-actors
-singers
define wholesaler
distributes goods
give examples of wholesalers
-clothing wholesaler
-> buy jackets manufacturers
-> divides large quantities into smaller ones and sells them to retailers
define retailer
purchases goods from a wholesaler and sells them to consumers, the final buyers of the goods
give examples of retailers
-Macy’s
-Target
-JcPenny’s
define non-profit organization
type of organization that focuses on providing a service, but not to make a profit
what is one example of a non-profit organization
Red Cross
what type of business, since they make no profit, do not pay taxes?
a non-profit organization
what type of business must register with the government
a non-profit organization
define production
process of creating, expanding, manufacturing, or improving goods and services
define procurement
the buying and reselling of goods that have already been produced
give an example of procurement
wholesalers
define marketing
the process of planning, pricing, promoting, selling, and distributing ideas, goods, and services
what function of business involves getting consumers to buy your product and look at market research and consumer trends
marketing
define management
the process of achieving company goals by planning, organizing, leading, controlling, and evaluating the effective use of resources
define finance
the business or art of money managemnt
what function of business looks at financial statements to make future decisions
finance
define accounting
involves maintaining and checking records, handling bills, and preparing financial reports for a business
define cooperative
an organization that is owned and operated by its members
what function of business has groups of members pool their resources to save money, their purpose is to save money
cooperative
give 2 examples of cooperative function of business
-small farms
-ocean spray, (cooperative of cranberry growers)
-you and your 2 siblings all shared a car
Sole proprietorships account for about __________ of all the business in the United States
70%
Income from a sole proprietorship is
taxed once
one of the disadvantages of having a partnership is
unlimited liability
a major advantage of forming a corporations is ________ liability
limited
an organization that is owned and operated by its members is a
cooperative
a contractual agreement to use the name and sell the products or services of a company in a designated geographic area is called a
franchise
if one of your goals is to limit your personal liability, it would be best to organize your business as a
corporation
a business owned by ten people who share the risks and rewards of the business is a
partnership
the easiest way to organize a business is as a
sole proprietorship
a film that turns corn into vegetable oil is called a
processor
a company that gather materials in their original state from natural resources is called a
producer
a processor changes raw materials into a ____________ product
more finished
processed goods are turned into finished products by a
processor
a business that moves goods from one business to another is called a
intermediary
a firm that buys large quantities of produce from many farms and the divides fruits and vegetables into smaller quantities and sells them to grocery stores is a __________
wholesaler
the buying and reselling of goods that have already been produced is called
procurement
the process of achieving company goals by planning, organizing, directing, controlling, and evaluating the effective use of resources is called
management
maintaining and checking records, handling bills, and preparing financial reports for business is called
accounting