Economics: Chapter 3: Business Organizations
Sole Proprietorship
A business owned and run by a single person who has the rights to all profits. Proprietor has unlimited liability for all debts of the company
Better Business Bureau
A business sponsored nonprofit organization providing information on local companies to consumers
Stock
A certificate of ownership in a corporation
Dividend
A check that transfers a portion of company profits to stockholders, usually quarterly
Vertical Merger
A combination of firms involved in different stages of manufacturing or marketing
Merger
A combination of two or more businesses to form a single firm
Horizontal Merger
A combination of two or more firms producing the same kind of product
Public Utility
A company providing an essential service such as water or electricity to consumers
Multinational
A corporation producing and selling without regard to national boundaries, with business activities in several different countries
Corporation
A form of business organization recognized by law as a separate legal entity
Preferred Stock
A form of corporate ownership without vote. Stockholders get their investments back before common stockholders
General Partnership
A form of partnership where all partners are equally responsible for management and debt
Limited Partnership
A form of partnership where one or more partners are not actively involved in the daily running of the business, and have limited responsibility for debts
Bond
A formal contract to repay borrowed money with interest
Chamber of Commerce
A nonprofit organization of local businesses formed to promote their interests
Professional Association
A nonprofit organization of professional or specialized workers seeking to improve working conditions, skill levels, and public perception of its profession
Cooperative (Co-op)
A nonprofit organization performing some kind of economic activity for the benefit of its members
Credit Union
A nonprofit service cooperative that accepts deposits, makes loans, and provides other services to employees of a particular company or government agency
Stockholder/Shareholder
A person who owns a share of stock in a corporation
Income Statement
A report showing a firm's sales, expenses, net income, and cash flows for a certain period
Nonprofit Organization
An economic organization that operates like a business, but does not seek financial gain
Labor Union
An organization that works for its members' interests concerning pay, working conditions and benefits
Partnership
An unincorporated business, owned and operated by two or more people who share the profits and responsibility for all debts
Conglomerate
Firms with four or more businesses making unrelated products, with no single business responsible for a majority of its sales
Capital Goods
Goods that are used in producing other goods, rather than being bought by consumers
Interest
Payment made for the use of borrowed money
Net Income
Remaining income after subtracting all expenses
The three forms of business organization
Sole Proprietorship, Partnership, Corporation
Principal
The amount borrowed when getting a loan or issuing a bond
Depreciation
The gradual wear on capital goods
Common Stock
The most frequently used form of corporate ownership. One vote per share for stockholders
Collective Bargaining
The negotiation between union and company representatives over pay, benefits and other job related matters
Inventory
The stock of finished goods and parts held in reserve
Double Taxation
The taxation of dividends both as corporate profit and as personal income
Cash Flow
The total amount of new funds that a business generates from operations
Charter
Written government approval to establish a corporation
