Eco ch 8
Advantages of a corporation
Access to resources Professional managers Limited liability Unlimited life
multinational corporation
An organization that manufactures and markets products in many different countries and has multinational stock ownership and multinational management
Advantages of Partnership
Easy to open and close Few Regulations Access to resources Joint decision making Specialization
Advantages of Sole Proprietorship
Easy to open or close Few regulations Freedom to control Owner keeps all profits
Disadvantages of a corporation
Startup cost and effort Heavy regulation Double taxation Loss of control
Which statement is most likely to be made by the owner of a sole proprietorship
The satisfaction of being my own boss is worth the risks I take
Disadvantages of Partnership
Unlimited liability Potential for conflict Limited life
What is a cooperative
a business operated for the shared benefit of its owners, who are also its customers
conglomerate
a group of diverse companies under common ownership and run as a single organization
Which of the following is an example of a vertical merger
a shirt factory acquires a button manufacturer
Who is responsible for the smooth day-to-day running of a corporation
corporate officers
angela opens a coffee shop, which she owns and where she sells a national brand of gourmet coffe that she pays licensing fees to do. what kind of business is this
franchise
Which is a common difficulty for a new sole proprietorship
having enough money to stay in business while building a customer base
What is it called when companies that produce the same product merge
horizontal merger
Which has the potential to be both an advantage and disadvantage of partnership?
joint decision making
Three certified public accountants form an accounting firm by pooling their investment money. None wants to be responsible if one of the others makes a serious financial error. What type of firm will they choose?
limited liability partnership
What is the term for a business in which none of the co-owners is responsible for the debts or mistakes of the others?
limited liability partnership
What is one of the major disadvantages of corporations
loss of control
Which of the following is an example of specialization in a partnership
one partner is a bookkeeper, the other is a gourmet chef
What is the term for a business that is co-owned by two or more people who agree on how responsibilities, profits and losses will be divided?
partnership
Which of the following is a disadvantage of partnership but not of sole proprietorship
potential for conflict
Which of the following people is most likely to succeed as a sole proprietor
someone who likes to make his or her own decisions
Which of the following is an advantage of partnership but not sole proprietorship
specialization of skills
What is the name for an individual who owns a share of a corporation and is entitled to part of its profits?
stockholder
What is the main risk that Rita would take if she invests in a corporation
that the value of her stock might decline
What does the term limited life mean?
the business does not continue if the owner leaves
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
Limited partnership
One partner is not involved in the day-to-day running of business and is liable only for the fans here she has invested
Sole proprietorship have an unlimited liability which means
Owner is responsible for all losses and debts against the business
Which of the following pairs of people with special skills are best suited to become business partners
A dressmaker and a salesperson
Which person is most likely to obtain a bank loan for her sole proprietorship?
Someone whose business has earned profits for two years
If the owner of a sole proprietorship closes his business while owing many debts, what is likely to happen?
He will have to sell his house and use his savings to pay those debts
Which is an example of a general partnership
Jan and Marie invest equal amounts of money and share all profits and losses
Disadvantages of Sole Proprietorship
Limited Funds Limited life Unlimited Liability
A group of organic farmers join together to market their produce. What is this an example of?
Producer cooperative
Which business organization is most common in the U.S?
Sole Proprietorship
Which of the following is the biggest difference between a sole proprietorship and a partnership
Sole proprietors have more control over decision making
Which of the following businesses is most likely to be a sole proprietorship?
dry cleaner
If a firm has no employees, what form of business organization is it most likely to have?
sole proprietorship
What is a business owned and managed by a single person called?
sole proprietorship
Which can be both an advantage and disadvantage of sole proprietorships?
the owner has total responsibility for all business decisions and financial obligations
what do many people consider to be the chief advantage of sole proprietorship
the owner keeps all the profits
Why do corporations sell stock?
to raise money to invest in the business
Which of the following are advantages that corporations have over sole proprietorships and partnerships?
unlimited life, limited liability