Ch 8 Review

In the United States, which type of business accounts for the greatest share of revenues?

A corporation

What is the most important type of business organization in the United States today in terms of the amount of business done?

A corporation

What is a joint venture?

A joint venture is a partnership set up for a specific purpose for a short period of time.

How do you determine whether a business made a profit?

Add your wages to your other expenses (including taxes) then subtract your total expenses from your receipts.

What are a major advantage and a major disadvantage of incorporating?

Advantage is limited liability Disadvantages are that they are taxed more heavily than other organizations

Explain the advantages and disadvantages of being a sole proprietor?

Advantages are sanctification from being the boss, being able to make the business whatever you want Disadvantages are running a business alone is demanding and time consuming.

What are the 4 basic elements of business operation?

Expenses, advertising, record keeping, and risk

List advantages to purchasing a franchise.

Name recognition and a proven way of doing business. Don't have to pay for advertising either.

How are sole proprietorships and partnerships taxed?

Taxes tend to be lower

A corporate charter is granted by whom?

The state (where it is established)

What does unlimited liability mean?

Unlimited liability is a requirement that an owner is personally/fully responsible for all losses & debts of a business.

Which business enterprise is taxed like a partnership?

A joint venture is taxed like a partnership. Limited liability company.

Define entrepreneur

A person who organizes, manages, and assumes the risks of a business in order to gain profits.

What is the goal of a small-business incubator?

Generate job creation and economic growth.

In a limited partnership, what do the limited partners contribute?

In a limited partnership, one partner assumes all of the management and the other partner contributes funds.

In a limited partnership, what do the limited partners contribute?

In a limited partnership, the general partner assumes all the management and has a full responsibility for the debts of the partnership.

Why would an entrepreneur want to take on a partner when starting a business?

Partnerships are more effective

Where can a person look for help in starting a new business?

People can turn to the government and Internet for help when trying to start a new business.

Why do people decide to start their own business?

People usually decide to start a business to gain profits, "to do something on their own", or to be their own boss.

What is the biggest disadvantage of a sole proprietorship?

Running a business alone is demanding and time consuming. The proprietor has unlimited liability.

Who owns a corporation?

Shareholders

Why light a person decide in favor of a partnership rather than a sole proprietorship?

So they aren't running a business on their own, a partner could make it easier.

What is the most common type of business organization?

Sole proprietorship

What are holders of preferred stock guaranteed?

They are guaranteed a certain amount of dividend each year

What is the board of directors of a corporation responsible for?

They are responsible for supervising and controlling the corporation.

What is a disadvantage of a corporation?

They are taxed more heavily than other forms of business organization.

What is a disadvantage of sole proprietorship and partnerships?

They have unlimited liability.

What is the main reason entrepreneurs are willing to take huge financial risks to start new businesses?

To gain profits

Who shares the profits and losses in a partnership?

Two or more individuals share the profits/losses in a partnership. (all partners)

Why might someone purchase a franchise rather than start his or her own business?

With a franchise, they are able to have name recognition.

If you run a business, what type of wage should you pay yourself?

You should pay yourself a wage equal to what you could learn earn elsewhere.

Lost advantages of a sole proprietorship.

You're your own boss, you are able to make the business whatever you want