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usd year 1 semester 1 > Survey of Business Exam 2 > Flashcards

Survey of Business Exam 2 Flashcards

1
Q

Single owner who manages the company

A

Sole Proprietorship

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2
Q

Voluntary agreement between two or more co-owners of a business or profit

A

Partnership

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3
Q

Advantages of Sole Proprietorship

A

-ease of formation
-retention of control
-pride of ownership
-retention of profits
-possible tax advantage

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4
Q

Disadvantages of Sole Proprietorship

A

-limited financial resources
-unlimited liability
-limited ability to attract and maintain talented employees
-heavy workload and responsibilities
-lack of performance

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5
Q

Advantages of Partnership

A

-ability to pool financial resources
-ability to share responsibilities and capitalize on complimentary skills
-ease of formation
-possible tax advantages

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6
Q

Disadvantages of Partnership

A

unlimited liability
-potential for disagreements
-lack of continuity
-difficulty in withdrawing form a partnership

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7
Q

Business is considered a legal entity that is separate & distinct from its owners

A

Corporation

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8
Q

Offers limited liability to owners & flexible tax treatment

A

Limited Liability Company (LLC)

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9
Q

Advantages of Limited Liability Company (LLC)

A

-limited liability
-tax pass-through
-simple & flexible management
-flexible ownership

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10
Q

Disadvantages of Limited Liability Company (LLC)

A

-complexity of formation
-annual franchise tax
-foreign status in other states
-limits on firms that can form LLCs
-differences in state law

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11
Q

All partners take an active role in managing the business; have unlimited liability for claims against the firm

A

General Partnership

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12
Q

Partnership agreement should entail details regarding

A

-initial financial contributions
-specific duties & responsibilities
-sharing profits and losses
-settling disagreements
-death or withdrawal of a partner

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13
Q

Includes at least one general partner who actively manages the company and accepts unlimited liability; while other partner gives up the right to actively manage the company in exchange for limited liability

A

Limited Partnership

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14
Q

All partners have the right to participate in the management and have limited liability for company debt

A

Limited Liability Partnership (LLP)

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15
Q

Offers limited liability to all stockholders (requires filing articles of incorporation, paying filing fees, and adopting corporate bylaws)

A

C Corporation

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16
Q

Elected by stockholders to represent their interests

A

Board of Directors

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17
Q

Organization that pools contributions from investors, clients, or depositors

A

Institutional Investor

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18
Q

Advantages of C Corporations

A

-limited liability
-permanence
-ease of transfer of ownership
-ability to raise financial capital
-ability to make use of specialized management

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19
Q

Disadvantages of C Corporations

A

-expense and complexity of formation and operation
-complications when operating in multiple states
-double taxation of earnings and additional taxes
-more paperwork and regulation & less secrecy
-possible conflicts of interest

20
Q

Advantages of S Corporations

A

-internal revenue service doesn’t tax earnings of S Corporations separately
-stockholders have limited liability

21
Q

Disadvantages of S Corporations

A

-can only have 100 stockholders
-w/ only rare exceptions, each stockholder must be a U.S. citizen or permanent resident of the U.S.

22
Q

Advantages of Statutory Close (Closed) Corporation

A

-operates under simple arrangements than conventional corporations
-owners can participate in management while still having limited liability

23
Q

Disadvantages of Statutory Close (Closed) Corporation

A

-limited number of stockholders
-not all states allow formation of this type of corporation
-stockholders normally can’t sell their shares to the public w/out first offering the shares to existing owners

24
Q

Advantages of Nonprofit Corporation

A

-earnings are exempt from federal and state income taxes
-members and directors have limited liability
-individuals who contribute money or property to the nonprofit can take a tax deduction

25
Q

Disadvantages of Nonprofit Corporation

A

-cannot have stockholders
-cannot distribute dividends to members
-cannot contribute funds to a political campaign
-must keep accurate records and file paperwork to document tax-exempt status

26
Q

One firm buys another firm

A

Acquisition

27
Q

Two formerly independent business entities combine to form a new organization (horizontal, vertical, conglomerate)

A

Merger

28
Q

Transfer of total or partial ownership of some of a firm’s operations to investors or to another company

A

Divestiture

29
Q

A combination of two firms that are in the same industry

A

Horizontal Merger

30
Q

A combination of firms at different stages in the production of a good or service

A

Vertical Merger

31
Q

A combination of two firms that are in unrelated industries

A

Conglomerate Merger

32
Q

Licensing arrangement under which a franchisor allows franchisees to use its name, trademark, products, and business methods

A

Franchise

33
Q

Business entity in a franchise relationship that allows others to operate its business using resources it supplies in exchange for money and other considerations

A

Franchisor

34
Q

Party in a franchise relationship that pays for the right to use resources supplied by the franchisor

A

Franchisee

35
Q

Type of franchising arrangement in which the franchisor makes a product and licenses the franchisee to sell it

A

Distributorship

36
Q

Broad franchise agreement in which the franchisee pays for the right to use the name, trademark, and business and production methods of the franchisor

A

Business Format Franchise

37
Q

Advantages of Franchising

A

-less risk
-training and support
-brand recognition
-easier access to funding

38
Q

Disadvantages of Franchising

A

-costs
-lack of control
-negative halo effect
-growth challenges
-restrictions on sale
-poor execution

39
Q

Contractual arrangement between a franchisor and franchisee that spells out the duties and responsibilities of both parties

A

Franchise Agreement

40
Q

Detailed description of all aspects of a franchise that the franchisor must provide to the franchisee at least 14 calendar days before the franchise agreement is signed

A

Franchise Disclosure Document (FDD)

41
Q

Rights to use a franchisor’s trademarks, patents, and signage, and any restrictions on those rights

A

Terms and Conditions

42
Q

Fees that a franchisee must pay for the right to use a franchisor’s products and methods

A

Fees and Other Payments

43
Q

Training that should be provided by the franchisor to the franchisee

A

Training and Support

44
Q

Methods and standards that a franchisee is required to follow

A

Specific Operational Requirements

45
Q

Manner in which a franchisor and franchisee handle their disputes

A

Conflict Resolution

46
Q

Assigned Territory

A

Geographic area in which a franchisee will operate and exclusivity of the rights to the area

usd year 1 semester 1 (6 decks)

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