Chapter 4 Flashcards
Sole proprietorship
a business that is owned/operated by one person
Advantages of sole proprietorship
simplicity and individual control
Unlimited liability
legal concept that holds a business owner personally responsible for all the debts of the business
Partnership
two or more persons to act as co-owners of a business for profit
General partner
person who assumes full or shared responsibility for operating a business
Limited partner
person who invests money in a business but has no management responsibility or liability for losses beyond the amount he or she invested in the partnership
Partnership agreement
who will make the final decision
what each partner’s duties will be
the investment each partner will make
how much profit or loss each partner receives or is responsible for
what happens if a partner wants to dissolve the partnership or dies
Master limited partnership (MLP)
limited partnership that has units of ownership that can be traded on security exchanges much like shares of ownership in a corporation
Corporation
an artificial person created by law, with most of the legal rights of a real person which includes;
right to start and operate a business, right to buy to sell property, right to borrow money, right to sue or be sued, and the right to enter into binding contracts
Stock
shares of ownership of a corporation
Stockholders
people who own a corporation’s stock and thus own part of the corporation
Closed corporation
corporation whose stock is owned by relatively few people and is not sold to the general public
Open Corporation
one whose stock can be bought and sold by any individual
examples include general electric, apple
