Chapter 8/9

partnerships generate ___ of sales

5%

sole proprietorships generate _____ of U.S sales

6%

in the U.S. partnerships are about ___ of all businesses

7%

corporations generate about __ of the net income earned in the nation

70%

corporations sell about __ of all products

90%

limited partners

DO contribute money but DO NOT manage the business or have unlimited personal liability

Which of the following is an example of a merger?

On company combines with another company that supplies it with raw materials

cooperative

a business organization owned and operated by a group of individuals for their mutual benefit

partnership

a business organization owned by two or more people who agree on a specific division of responsibilities & profits

sole proprietorship

a business owned & managed by a single individual

stock

a certificate of ownership in a corporation

bond

a formal contract to repay borrowed money with interest at fixed intervals

in a publicly held corporation

a large number of stockholders can buy & sell stock

corporation

a legal entity owned by individual stockholder

articles of partnerships

a partnership agreement

what is a fringe benefit?

a payment other than wages or salaries

business franchise

a semi-independent business that pays fees to a parent company in return for the exclusive right to sell a certain product or service in a given area

people considered to be employed are

a) 16 y/o b) they worked at least 1 hour for pay within the past week c) worked 15+ hours w/o pay in a family business (ie: farm) d) held jobs, but did not work due to illnesses, vacations, labor disputes, or bad weather

advantages of franchises

a) built in reputation b) management training & support c) standardized quality d) national advertising programs e) financial assistance f) centralized buying power

advantages of partnerships

a) ease of start up b) shared decision making & specialization c) larger pool of capital d) taxation

in a limited liability partnership, all partners

are limited from personal liability in certain situations

examples of LLPs

attorneys, physicians, dentists, & accountants

business license

authorization to start a business issued by the local government

there are more women in the labor force

because women have increased their human capital

the most important decisions in a corporation are made by the

board of directors

corporate structures

board of directors, who appoints corporate officers, who hire managers/employees & work in various department

conglomerate

business combination merging more than three businesses that make unrelated products

your uncle owns a convenience store that branches nationwide. his store is an example of a

business franchise

a merger that combines more than three businesses that make unrelated products is called

conglomerate

which type of cooperative sells merchandise to its members at reduce prices?

consumer

which of the following is NOT a type of partnership?

cooperative

service cooperative

cooperative that provides a service, rather than a good

a corporation can offer as many shares of stocks as are allowed by the

corporate charter

which type of business organization has shareholders?

corporation

you are looking for a job with many fringe benefits. you would probably prefer to work at a

corporation

closely held corporation

corporation that issues stock to only a few people, often family members.. privately held corporations

publicly held corporation

corporation that sells stick on the open market

most large businesses are

corporations

advantages for corporation

growth potential & long life potential

possible corporate combinations

horizontal & vertical mergers, conglomerates

higher education has changed the labor force by

increasing human capital

nonprofit cooperative

institution that functions much like a business, but does not operate for the purpose of generating profits

what is an advantage of a sole proprietorship?

it is the least regulated form of business organizations

multinational corporation (MNC)

large corporation that produces & sells its goods & services throughout the world

zoning laws

law in a city or town that designates separate areas for residency and business

pros of a proprietorship

least regulated make own decisions no special/additional taxes to be paid

liability is the

legal obligation to pay debts

certificate of incorporation

license to form a corporation issued by state government

advantages for stockholders

limited liability & stocks can be sold

you decide to go to a consumer cooperative to buy supplies for your party. prices are cheaper there mainly because consumer cooperatives

make large purchases

assets

money and other valuables belonging to an individual or business

good wireless and better wireless merge to form best wireless. the federal government watches this merger carefully for evidence of a

monopoly

business association

nonprofit organization that promotes collective business interests for a city state, or other geographical area, or for a group of similar businesses

trade association

nonprofit organization that promotes the interests of a particular

professional organization

nonprofit organization that works to improve the image, working conditions, and skill levels of people in particular occupations

which of the following is an advantage of a sole proprietorship?

not highly regulated by the government

in a limited liability

only one partner is required to be a general partner

labor union

organized group of workers whose aim is to improve working conditions, hours, wages, & fringe benefits

limited liability partnership (LLP)

partnership in which all partners are limited partners

limited partnership

partnership in which only one partner is required to be a general partner

general partnership

partnership in which partners share equally in both responsibility & liability

fringe benefits

payments other than wages or salaries

the electronic boom of the mid 20th century

produced a new surge of factory jobs

almost all nonprofit organizations

provide services rather than goods

consumer cooperative

retail outlet owned and operated by consumers

a disadvantage of a franchise is that the franchise owner must

sacrifice some freedom in return for the parent company's guidance

in return for a fee to a franchiser, a business owner receives the right to

sell the franchiser's goods & services

one of the ways a corporation can raise money is by

selling stock on the stock market

royalty

share of earnings given as payment

the most common form of business organization is the

sole proprietorship

most common forms of business organizations are

sole proprietorships

examples of corporations

supermarkets, high tech companies, machinery manufacturers

horizontal merger

the combination of two or more firms competing in the same market with the same good or service

vertical merger

the combination of two or more firms involved in different stages of producing the same good or service

in the beginning of the 1970s

the invention of the computer chip created growth in computer-related jobs

liability

the legally bound obligation to pay debts

dividend

the portion of corporate profits paid out to stockholders

learning effect

the theory that education increases productivity & results in higher wages

screening effect

the theory that the completion of college indicates ti employers that a job applicant is intelligent & hardworking

people are considered unemployed if

they are temporarily out of work or are not working but have looked for jobs within the last 4 weeks

which of the following is NOT a government requirement when starting a sole proprietorship?

to give clients 90 days notice prior to shutting down operations

cons of proprietorship

unlimited liability (personal belongings at risk) business loses money not easy to borrow money from banks, etc

a partnership is a business organization owned by

2 or more individuals

corporations make up __ of all businesses in the US

20%

partnerships are __ of income

10%

advantages of a sole proprietorship

a) easy start up - small amount of paperwork, obtain a business license, obtain a certificate of occupancy if not working from home, register a business name if not using a personal name b) relatively few regulations - subject to zoning laws, which may prohibit sole proprietors from operating businesses out of their homes, face very few legal requirements c) sole receiver of profit - owner keeps all money after paying income taxes d) full control - can respond quickly to changes in the marketplace because business(es) can be ran as the proprietor wishes, e) easy to discontinue - other than debts & taxes, no legal obligations need to be met to stop the business

disadvantages of incorporation

a) expense & difficulty of start up - apply for state license (certificate of incorporation), receive charter from state b) double taxation - corporation pays taxes on income, stockholders pay taxes on dividends and capital gains c) potential loss of control by the founders - d) more legal requirements & regulations - annual shareholders meetings, careful record keeping, annual and quarterly reports to SEC

disadvantages of franchises

a) franchise owner must sacrifice some freedom in return for the parent company's guidance b) high franchising fees and royalties c) strict operating standards d) purchasing restrictions e) limited product line

advantages of incorporation

a) limited liability for owners b) transferable ownership c) ability to attract capital d) long life

disadvantages of partnerships

a) unlimited liability b) potential for conflict

disadvantages of sole proprietorships

a) unlimited personal liability - sole proprietors are fully & personally responsible for all their business debts b) limited access to resources - lack of human and physical capital c) lack of permanence - no one will maintain the business besides the sole proprietor; few employees due to lack of fringe benefits.

according to the Internal Revenue Service (IRS)

about 75% of businesses are sole proprietorships.. but most of them are small.

Uniform Partnership Act (UPA)

act ordering common ownership, interests, profit and loss sharing, and shared management responsibilities in a partnership

producer cooperative

agricultural marketing cooperative that helps members sell their products

labor force

all nonmilitary people who are employed or unemployed

if a general partnership fails, who is responsible for the debts?

all of the partners

business organization

an establishment, company or firm, formed to carry on commercial enterprise

examples of a general partnership

doctors, lawyers, accountants, small retail stores, farms, construction companies, family businesses

sole proprietors

earns all of the firm's profits & is responsible for the firm's debts

museums, public schools, and YMCAs are all

exempt from paying income taxes