Chapter 4 Flashcards
Options for Organizing a Business (25 cards)
Sole Proprietorships
businesses owned and operated by one individual; the most common form of business organization in the United States.
Partnerships
an association of two or more persons who carry on as co-owners of a business for profit.
General Partnership
a partnership that involves a complete sharing in both the management and the liability of the business.
Limited Partnership
a business organization that has at least one general partner, who assumes unlimited liability, and at least one limited partner, whose liability is limited to their investment in the business.
Articles of Partnership
legal documents that set forth the basic agreement between partners.
Corporation
a legal entity, created by the state, whose assets and liabilities are separate from its owners.
Stock
shares of a corporation that may be bought or sold.
Dividends
profits of a corporation that are distributed in the form of cash payments to stockholders.
Corporate Charter
a legal document that the state issues to a company based on information the company provides in the articles of incorporation.
Private Corporation
a corporation owned by just one or a few people who are closely involved in managing the business.
Public Corporation
a corporation whose stock anyone may buy, sell, or trade.
Initial Public Offering (IPO)
when a privately-owned company first sells shares to the public, allowing it to become publicly traded on a stock exchange.
Quasi-publix Corporations
corporations owned and operated by the federal, state, or local government.
Nonporfit Corportions
corporations that focus on providing a service rather than earning a profit but are not owned by a government entity.
Board of directors
a group of individuals, elected by the stockholders to oversee the general operation of the corporation, who set the corporation’s long-range objectives.
Prefrerred Stock
a special type of stock whose owners, though not generally having a say in running the company, have a claim to profits before other stockholders.
Common Stock
stock whose owners have voting rights in the corporation, yet do not receive preferential treatment regarding dividends.
Joint Venture
a partnership established for a specific project or for a limited time.
S corporation
corporation taxed as though it were a partnership with restrictions on shareholders.
Limited Liability Company (LLC)
form of ownership that provides limited liability and taxation like a partnership but places fewer restrictions on members.
Cooperative (co-op)
an organization composed of individuals or small businesses that have banded together to reap the benefits of belonging to a larger organization.
Merger
the combination of two companies (usually corporations) to form a new company.
Acquistion
the purchase of one company by another, usually by buying its stock.
Leverage Buyout(LBO)
a purchase in which a group of investors borrows money from banks and other institutions to acquire a company (or a division of one), using the assets of the purchased company to guarantee repayment of the loan.
