Chapter 7 Chapter Reviews Flashcards
What are the advantages of sole proprietorship?
- Freedom to enter and exit the market easily
- Freedom from outside control
- Freedom to retain information
- Freedom from paying excessive taxes
- Freedom from being an employee
What are the disadvantages of sole proprietorship?
- Unlimited personal financial liability
- Limited management and employee skills
- Limited life
- Limited availability of money
What are the advantages of a partnership?
- Greater management skills
- Greater possibility of keeping competent employees
- Greater sources of financing
- Ease of formation
- Freedom to manage
What are the disadvantages of a partnership?
- Unlimited personal financial liability
- Uncertain life
- Potential conflicts between partners
What does it mean to be surety for someone?
Becoming security for or pledging to undertake his debt.
What are the two forms of partnership?
General Partnership and Limited Partnership
According to the law, what is a corporation, and what are its important properties?
A corporation is an artificial being, invisible, intangible, and existing only in the contemplation of the law. Its important properties are immortality and individuality.
How does one become a partial owner of a corporation?
By buying shares of its stock.
What are the advantages of incorporation?
- Limited personal financial liability
- Experienced management and specialized employees
- Continuous life
- Ease in raising financial capital
What are the disadvantages of incorporation?
- Higher taxes
- Greater governmental regulation
- Lack of secrecy
- Impersonality
- Rigidity
What are the two biblical principles on partnerships discussed in the text?
The warnings against unequal yoking and becoming surety.
An LLC combines the benefits of which two forms of business ownership?
Partnership and corporation
