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Business Management - Puggi > Puggi - Chapter 4 > Flashcards

Puggi - Chapter 4 Flashcards

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1
Q
  • A business owned and (usually) operated by one person

- Simplest and most popular form of business ownership

A

Sole Proprietorship

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2
Q
  • Ease of start-up and closure
  • Pride of ownership
  • Relation to all profits
  • No special taxes
  • Flexibility of being your own boss
A

Advantages of Sole Proprietorship

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3
Q
  • Unlimited liability
  • Lack of continuity
  • Lack of money
  • Limited management skills
  • Difficult in hiring employees
A

Disadvantages of Sole Proprietorship

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4
Q

Legal concept that holds a business owner personally responsible for all the debts of the business

A

Unlimited Liability

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5
Q

Voluntary association of two or more persons to act as co-owners of a business for profit

A

Partersnip

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6
Q

Person who assumes full or shared responsibility for operating a business

A

General Partner

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7
Q

Person who invests money in a business, but who has no management responsibility or liability for loses beyond his or her investment in the partnership

A

Limited Partner

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8
Q

Agreement listing and explaining the terms of the partnership:

  • Who will make final decisions
  • 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
A

The Partnership Agreement

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9
Q
  • Ease of start-up
  • Availability of capital and credit
  • Personal interest
  • Combined business skills and knowledge
  • Retention of profits
  • No special taxes
A

Advantages of Partnership

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10
Q
  • Unlimited liability
  • Management disagreements
  • Lack of continuity
  • Frozen investments
A

Disadvantages of Partnership

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11
Q

Artificial person created by law with most of the legal rights of a real person, including the rights to start and operate a business, to buy or sell property, to borrow money, to be sue or be sued, and to enter into binding contracts

A

Corporation

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12
Q

The shares of ownership of a corporation

A

Stock

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13
Q

A person who owns a corporation’s stock

A

Stockholder

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14
Q

Stock owned by relatively few people and not sold to public

A

Closed Corporation

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15
Q

Stock is bought and sold on security exchanges and can be bought by anyone

A

Open Corporation

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16
Q

Corporation in the state in which it is incorporated

A

Domestic Corporation

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17
Q

Corporation in any state in which it does business except the one in which it is incorporated

A

Foreign Corporation

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18
Q

Corporation chartered by a foreign government and conducting business in the United States

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A

Alien Corporation

19
Q

Contact between the corporation and the state in which the state recognizes the formation of the artificial person that is the corporation

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A

Articles of Incorporation

20
Q

Stock owned by individuals pr firms who may vote on corporate matters but whose claims on profit and assets are subordinate to the claims of others

21
Q

Stock owned by individuals or firms who usually do not have voting rights, but whose claims on dividend are paid before those of common-stock owners

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A

Preferred Stock

22
Q

A distribution of earnings to the stockholders of a corporation

23
Q

Legal form listing issues to be decided at a stockholders’ meeting and enabling stockholders to transfer their voting rights to some other individual or individuals

24
Q
  • Last step in forming a corporation

- Board members are directly responsible to stockholders for how they operate the firm

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A

Organizational Meeting

25
- Limited liability - each owner's financial liability is limited to the amount of money that he or she has paid for stock - Ease of raising capital - Ease of transfer of ownership - Perpetual life - Specialization management
Advantages of Corporation
26
- Difficulty and expense of formation - Government regulation and increased paperwork - Conflict within the corporation - Double taxation - Lack of secrecy
Disadvantages of Corporation
27
A corpoartion that is taxed as if it were a partnership (income taxed as a personal income of stockholders)
S-Corporations
28
- Avoids double taxation of a corporation | - Retains the corporation's legal benefit of limited liability
Advantages of S-Corporation
29
- No more than 100 stockholders allowed - Stockholders must be individuals, estates, or certain trusts - There can only be one class of outstanding stock - The firm must be a domestic corporation - No partnerships, corporations, or nonresident-alien stockholders - All stockholders must agree to form an S-Corporation
S-Corporation Criteria
30
Form of business ownership combining the benefits of a corporation and partnership but avoids some of restrictions and disadvantages
Limited-Liability Company (LLC)
31
- Avoids double taxation of a corporation - Retains the corporation's legal benefit of limited liability - Provides more management flexibility
Advantages of LLC
32
- LLC not restricted to 100 stockholders | - LLC has fewer restrictions on who ca be a stockholder
Difference between LLC & S-Corporation
33
Organized to provide social, educational, religious, or other services, rather to earn a profit
Not-For-Profit Corporations
34
Agreements between two or more groups to form a business entity in order to achieve a specific goal or to operate for a specific period of time
Joint Ventures
35
Temporary associations of individuals or firms organized to perform a specific task that requires a large amount of capital
Syndicates
36
Purchase of one corporation by another (essentially the same as an acquisition)
Merger
37
Situation in which the management and board of directors of the firm targeted for acquisition disapprove of the merger
Hostile Takeover
38
Offer to purchase the stock of a firm targeted for acquisition at a price just high enough to tempt stockholders to sell their shares
Tender Offer
39
Technique used to gather enough stockholder votes to control a targeted company
Proxy Fight
40
- Merger between firms that make and sell similar products | - Subject to approval by federal agencies to protect competition
Horizontal Mergers
41
- Merger between firms that operate at different but related levels of production and marketing a product - Usually one firm is a supplier or customer of the other
Vertical Mergers
42
Merger between firms in completely different industries
Conglomerate Mergers
43
- Can install a new top-management team - Forces the company to focus on one main business - Can reduce expenses - Makes company more profitable
Advantages of Merger/Acquisition
44
- Does not enhance profitability or productivity | - Only profits investment bankers, brokerage firms, and takeover "artists."
Disadvantages of Merger/Acquisition

Business Management - Puggi (1 decks)

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