CH03 - DSM
what is the main task of a board of directors?
A board of directors is the governing body of a corporation that reports to its shareholders and delegates power to run its day-to-day operations while remaining responsible for sustaining its assets.
what is a board of directors responsible for?
A board of directors is the governing body of a corporation that reports to its shareholders and delegates power to run its day-to-day operations while remaining responsible for sustaining its assets. The board does not lend money.
Which of the following BEST describes an established market?
One in which many firms compete according to relatively well-defined criteria
The team of top managers hired to manage a corporation on a daily basis are BEST known as
officers: The team of top managers hired to manage a corporation on a daily basis are BEST known as officers. Examples of officers include CEOs, presidents, and vice presidents.
The U.S. Small Business Administration regards companies with as many as (this # of employees) employees as small, but only if the business has relatively low annual revenues.
1,500
closely held corporation
A closely held (or private) corporation is a type of corporation whose stock is held by only a few people and is not available for sale to the general public.
Which of the following BEST describes a transnational corporation?
A corporation that operates in more than one country, is subject to the regulations of those countries, and may trade stock on different exchanges
Which of the following is the BEST definition of a master limited partnership?
A form of ownership that sells shares to investors who receive profits and that pays taxes on income from profit : Master limited partnership is the form of ownership that sells shares to investors who receive profits and that pays taxes on income from profit.
what is a general partner?
A general partner is a partner who actively manages a firm and who has unlimited liability for its debts.
what is an S corporation
A hybrid of a closely held corporation and a partnership that is organized and operated like a corporation but treated as a partnership for tax purposes
What is unlimited liability?
A legal principle that holds owners responsible for paying off all debts of a business
what is a LLC (limited liability corporation)
A limited liability corporation, LLC, is a hybrid of a publicly held corporation and a partnership in which owners are taxed as partners but enjoy the benefits of limited liability.
publicly held corporation
A publicly held (or public) corporation is a type of corporation whose stock is widely held and available for sale to the general public.
Which of the following is a company that offers shares of its stock to the general population?
A publicly held corporation
what is a SBIC (small business investment company)
A small business investment company (SBIC) is a government-regulated investment company that borrows money from the SBA to invest in or lend to a small business.
Which of the following is licensed by the government to borrow funds from the Small Business Administration (SBA) and loan it to small businesses?
A small business investment company: A small business investment company (SBIC) is licensed by the government to borrow funds from the Small Business Administration (SBA) and loan it to small businesses. An SBIC can also use funds from the SBA to invest in small businesses.
what is a spin off?
A spin off is a strategy of setting up one or more corporate units as new, independent corporations.
what is a stockholder?
A stockholder (or shareholder) is an owner of shares of stock in a corporation. Officers are often also shareholders.
subchapter s corporation
A subchapter S, or S corporation, is a hybrid of a closely held corporation and a partnership, organized and operated like a corporation but treated as a partnership for tax purposes.
Who is responsible for the day-to-day running of business operations in a general partnership to ensure growth?
Active partners: The role of a general or active partner involves running day-to-day business operations to ensure growth. In a limited partnership, this is the partner who actively manages the firm and who has unlimited liability for its debts. Corporations, not limited partnerships, sell shares, called stock. Someone who owns and operates a business is known as a sole proprietor. In a limited partnership, the partner who invests some money in the business is known as the limited partner. A limited partner cannot take an active role in business operations.
What is an employee stock ownership plan?
An arrangement in which a corporation holds its own stock in trust for its employees, who gradually receive ownership of the stock and control its voting rights
what is an ESOP (employee stock ownership plan)
An employee stock ownership plan (ESOP) is an arrangement in which a corporation holds its own stock in trust for its employees, who gradually receive ownership of the stock and control its voting rights.
what is an institutional investor?
An institutional investor is a large investor, such as a mutual fund or a pension fund, that purchases large blocks of corporate stock.
Within a company, who is responsible for communicating with stockholders and setting policy on dividends, major spending, and executive compensation?
Board of directors: The board of directors is responsible for communicating with stockholders and setting policy on dividends, major spending, and executive compensation Although board members oversee operations, most do not participate in day-to-day management. Rather, they hire a team of managers to run the firm. The firm's chief executive officer (CEO), who is responsible for overall performance usually, heads this team, called officers. Other officers typically include a president, who is responsible for internal management, and vice-presidents, who oversee various functional areas such as marketing and operations.
Within a company, who is responsible for communicating with stockholders and setting policy on dividends, major spending, and executive compensation?
Board of directors: The board of directors is responsible for communicating with stockholders and setting policy on dividends, major spending, and executive compensation. Although board members oversee operations, most do not participate in day-to-day management. Rather, they hire a team of managers to run the firm. The firm's chief executive officer (CEO), who is responsible for overall performance usually, heads this team, called officers. Other officers typically include a president, who is responsible for internal management, and vice-presidents, who oversee various functional areas such as marketing and operations.
What is the role of the Board of Directors in a publicly held corporation?
Communicating with stockholders and setting financial policy: The board of directors is responsible for communicating with stockholders and setting policy on dividends, major spending, and executive compensation. Although board members oversee operations, most do not participate in day-to-day management. Rather, they hire a team of managers to run the firm. The firm's chief executive officer (CEO), who is responsible for overall performance usually, heads this team, called officers. Other officers typically include a president, who is responsible for internal management, and vice-presidents, who oversee various functional areas such as marketing and operations.
Which of the following is NOT a type of corporation?
Cooperative
Which of the following is NOT a type of corporation?
Cooperative: A cooperative is NOT a type of corporation. A cooperative is a group of sole proprietorships or partnerships that agree to work together for their common benefit. A corporation is a business that is legally considered an entity separate from its owners and is liable for its own debts.
Which of the following business models is limited by its ability to serve only the specific needs of their members?
Cooperative: A limitation of cooperatives is that they serve only the specific needs of their members. Cooperatives are a form of ownership in which a group of sole proprietorships or partnerships agree to work together for common benefits. One advantage of cooperatives is that they give members greater production power. Cooperatives have the advantage of providing members with increased marketing presence. In a sole proprietorship, not a cooperative, owners have a great deal of freedom—they answer to no one but themselves.
Which of the following is one of the MOST significant trends for a small business start-ups?
E-commerce
Which of the following represents the purchase of large blocks of corporate stock?
Institutional investors
Which of the following is NOT a type of corporation?
Joint venture
Which of the following is a strategic alliance in which the collaboration involves joint ownership of the new venture?
Joint venture
what is a limited partner?
Limited partner is a partner who does not share in a firm's management and is liable for its debts only to the limits of said partner's investment.
what is a limited partnership?
Limited partnership is a type of partnership consisting of limited partners and a general partner.
Which of the following is an organization that sells partnerships to investors on public markets such as the New York Stock Exchange?
Master limited partnership: A master limited partnership (MLP) is a limited partnership that sells partnership interests on an exchange such as the New York Stock Exchange, much like shares in a corporation.
In which type of organization is the stock held by a wide variety of investors?
Publicly held
Which of the following is a hybrid of a closely held corporation and a partnership that is organized and operated like a corporation but treated as a partnership for tax purposes?
S corporation: An S corporation is a hybrid of a closely held corporation and a partnership that is organized and operated like a corporation but treated as a partnership for tax purposes.
Which of the following is the BEST example of a general partnership?
Sam, Will, and Josie open and operate a ski apparel shop together.
In which industry are small businesses most prevalent?
Services: The largest industry where small businesses are most prevalent is services. About 55.8 percent of businesses with fewer than 20 employees are involved in the service industry. Retail is the third largest industry where small businesses are most prevalent. This industry accounts for approximately 11.8 percent of small businesses. Construction is the second largest industry where small businesses are most prevalent. Approximately 12.1 percent of all small businesses in the United States are involved in construction. Wholesaling is the fourth largest industry where small businesses are most prevalent. This industry accounts for approximately 5.2 percent of businesses with fewer than 20 employees.
Which of the following BEST defines a corporate spin off?
Setting up one or more corporate units as independent corporations
In order to be considered a small business by the Small Business Administration, what two conditions must be met?
The business must have fewer than 1,500 employees and a relatively low annual revenue.
Which of the following is a limitation of cooperatives?
They serve only the specific needs of their members.
Which of the following BEST describes the role of a small business investment company?
To borrow money from the Small Business Administration and loan it to small businesses: The role of a small business investment company is to borrow funds from the Small Business Administration and loan it to small businesses. A small business investment company (SBIC) is licensed by the government to borrow funds from the Small Business Administration (SBA) and loan it to small businesses. An SBIC can also use funds from the SBA to invest in small businesses. Venture capital companies are a group of small investors who invest money in companies with rapid growth potential. Most of these firms do not lend money. They invest it by supplying capital in return for partial ownership. A board of directors is the governing body of a corporation that reports to its shareholders and delegates power to run its day-to-day operations while remaining responsible for sustaining its assets. The board does not lend money. An employee stock ownership plan (ESOP) is an arrangement in which a corporation holds its own stock in trust for its employees, who gradually receive ownership of the stock and control its voting rights.
What is the function of the SBA's Small Business Development Center?
To provide collected information from various disciplines and institutions that can be used by companies
what is the purpose of a business plan?
To summarize business strategies for proposed new ventures, entrepreneurs create business plans.
what is a venture capital company?
Venture capital companies are a group of small investors who invest money in companies with rapid growth potential. Most of these firms do not lend money. They invest it, supplying capital in return for partial ownership.
Which of the following describes a merger?
When one firm buys another firm of approximately the same size to create a new corporation
what is a limited partner?
a limited partner is a partner who does not share in a firm's management and is liable for its debts only to the limits of said partner's investment.
A business that is owned, and usually operated, by one person who is responsible for all of its debts is called what?
a sole proprietorship
Eli, Ron, and Charlie decide to set up their new business as a limited liability corporation (LLC), which is a hybrid of these two types of corporations: a *what* and a partnership.
public corporation
The role of a general or active partner involves what?
running day-to-day business operations to ensure growth
Small businesses account for the majority of what industry sector?
services
A corporation's officers are made up of a
team of top managers hired to manage a corporation on a daily basis: The team of top managers hired to manage a corporation on a daily basis are BEST known as officers. Examples of officers include CEOs, presidents, and vice presidents. A board of directors is the governing body of a corporation that reports to its shareholders and delegates power to run its day-to-day operations while remaining responsible for sustaining its assets An institutional investor is a large investor, such as a mutual fund or a pension fund, that purchases large blocks of corporate stock. General (or active) partners are partners who actively manage a firm and who have unlimited liability for its debts.
A buyer that directly contacts a corporation's stockholders and presents an offer to buy shares of the company is using a legal process known as a
tender offer
What is the function to provide collected information from various disciplines and institutions that can be used by companies?
the Small Business Development Center: The function of the Small Business Development Center is to provide collected information from various disciplines and institutions that can be used by companies.