chapter 4 smartbook

the purchase of one company by another, usually by buying its stock, is a(n) ________

acquisition

what is a disadvantage of sole proprietorship

it is directly linked to the owner's ability to work

what are some advantages of a sole proprietorship

its easy to dissolve has the greatest form of secrecy owner retains all profits

when two firms join together to form one new company, it is called a(n) _____

merger

as an entity, cooperatives are not set up to make _______

money

the owner of a ______ has complete control and can make decisions without anyone else's approval

sole proprietorship

in a partnership, why is shared business responsibility considered a disadvantage?

a bad business decision of one partner can jeopardize the personal resources of the other partner

true or false. corporations owners' can have unlimited liability

false

a sole proprietor needs what type of skills (give 3)

financing marketing personnel management

what is a disadvantage in a partnership

friction between general and limited partners

a partnership where all owners share in operating the business and in assuming unlimited liability for the business's debts is a(n) ______.

general partnership

what's the difference between general and limited partnerships

general= both partners assume unlimited liability limited= at least one partner assumes unlimited liability and at least who assumes limited liability

what is the board of directors

group of individuals that set the long-range objectives of the corporation

if two companies that both make water valves for plumbing contractors merge, it would be an example of a ______ merger.

horizontal

what are three things that make up the articles of partnership

how profits and losses will be distributed to each how much each person put initially put into company what each person's responsibility and job will be

what is unlimited liability

if the business cannot pay its creditors, the owner may be forced to use personal, nonbusiness holdings such as a car or home to pay off the debts.

a private corporation that needs more money to expand or to take advantage of opportunities may have to obtain financing by "going public" through a(n) _______, that is, becoming a public corporation by selling stock so that it can be traded in public markets.

initial public offering

the selling of a corporation's stock on public markets for the first time is known as ______

initial public offering

a partnership established for a specific project or for a limited time is called a ______ venture

joint

what is a corporation

legal entity, created by the state, whose assets and liabilities are separate from its owners.

a(n) ______ is an attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing.

levered buyout

perpetual ______ for a corporation means that the death of one owner does not end the corporation

life

stockholders' liability for losses only up to the amount they invest is called ______ liability

limited

what is an advantage of having a corporation rather than a sole proprietorship

limited liability

a legal form of business with two or more owners is a(n) ______

partnership

an association of two or more persons who carry on as co-owners of a business for profit is the definition of a(n) _______

partnership

what kind of business doesn't pay taxes when submitting the organization's tax return and what is it called when a company can get something tax exempt

partnership; quasi-taxable organization

what is the ease of transfer of ownership and which type of business is it an advantage for (sole proprietorship, partnership, corporation)

ease of transfer means that stockholders can sell or trade shares of stock without causing the termination of the corporation and they can do this without prior approval of other stockholders; it is an advantage for corporations

_____ must make information available to their owners, usually through an annual report to shareholders.

corporations

when the corporation pays a tax on its profits and individual stockholders each pay tax on dividends distributed by the corporation, it is called ______

double taxation

what is a company (or individual) called that wants to acquire or take over another company?

corporate raider

a form of business ownership that looks like a corporation but is taxed as though it were a partnership with restrictions on the number of shareholders is ______

an S corporation

the state issues a corporate charter to a company based off the information in what

articles of incorporation

which legal document sets forth the basic agreement between partners?

articles of partnership

why are the startup costs of filing for incorporation so high

bc lawyers and accountants are needed to do the complex filings

_____ are legally liable for the mismanagement of the firm or for any misuse of funds

board members

although owners of _______ stock do not get any preferential treatment with regard to dividends, they do get some say in the operation of the corporation

common

what type of stockholders have the right to vote for the board of directors

common

if a chemical company merged with a textile manufacturer, it would be an example of a ______.

conglomerate merger

a business owned and controlled through pooled resources by the people who use it is a(n) ______

cooperative

a legal document that the state issues to a company based on information the company provides in the articles of incorporation is called a ______

corporate charter

this is a special type of stock whose owners, though not generally having a say in running the company, have a claim to profits before other stockholders do

preferred

A(n) ______ is owned by just one or a few people who are closely involved in managing the business

private corporation

anyone may buy, sell, or trade from a _____ corporation

public

this type of corporation is owned and operated by the federal, state, or local government.

quasi-public corporation

the term of the business being dependent on the life of the business owner is referred to as ______

the lack of continuity

how are the members of a board of directors selected

they are elected by the stockholders of the company

true or false: Specialized professionals in fields like accounting are often hired by sole proprietors who lack knowledge in that area.

true

true or false: articles of partnership is the basic requirement of starting a partnership.

true

in a sole proprietorship if any debts or damages incurred by the business that cannot be paid by the business are your personal debts. this disadvantage is known as ________

unlimited liability

a merger that joins two companies involved in different but related levels of an industry is a(n) ______ merger

vertical

what is a conglomerate merger

when two firms in unrelated industries merge