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Business Essentials, Fifth Canadian Edition
Terms in this set (50)
The purchase of a company by another, larger firm, which absorbs the smaller company into its operations.
board of directors:
A group of individuals elected by a firm's shareholders and charged with overseeing, and taking legal responsibility for, the firm's actions.
Document in which the entrepreneur summarizes her or his business strategy for the proposed new venture and how that strategy will be implemented.
chief executive officer (CEO):
The person responsible for the firm's overall performance.
An organization that is formed to benefit its owners in the form of reduced prices and/or the distribution of surpluses at year-end.
Shares whose owners usually have last claim on the corporation's assets (after creditors and owners of preferred stock) but who have voting rights in the firm.
A merger of two firms in completely unrelated businesses.
The relationship between shareholders, the board of directors, and other top managers in the corporation.
Occurs when a company sells part of its existing business operations to another company.
employee stock ownership plan (ESOP):
An arrangement whereby a corporation buys its own stock with loaned funds and holds it in trust for its employees. Employees "earn'' the stock based on some condition such as seniority. Employees control the stock's voting rights immediately, even though they may not take physical possession of the stock until specified conditions are met.
A business person who accepts both the risks and the opportunities involved in creating and operating a new business venture.
An arrangement that gives franchisees (buyers) the right to sell the product of the franchiser (the seller).
Stipulates the duties and responsibilities of the franchisee and the franchiser.
An acquisition in which the management of the acquired company welcomes the firm's buyout by another company.
A partner who is actively involved in managing the firm and has unlimited liability.
A merger of two firms that have previously been direct competitors in the same industry.
An acquisition in which the management of the acquired company fights the firm's buyout by another company.
initial public offering (IPO):
Selling shares of stock in a company for the first time to the general investing public.
Members of a corporation's board of directors who are also full-time employees of the corporation.
Investor liability is limited to their personal investments in the corporation; courts cannot touch the personal assets of investors in the event that the corporation goes bankrupt.
A partner who generally does not participate actively in the business, and whose liability is limited to the amount invested in the partnership.
The union of two companies to form a single new business.
An enterprise that the owner operates part-time from the home while continuing regular employment elsewhere.
Members of a corporation's board of directors who are not also employees of the corporation on a day-to-day basis.
A corporation that owns a subsidiary.
A business with two or more owners who share in the operation of the firm and in financial responsibility for the firm's debts.
Shares whose owners have first claim on the corporation's assets and profits but who usually have no voting rights in the firm.
A business whose stock is held by a small group of individuals and is not usually available for sale to the general public.
A business whose stock is widely held and available for sale to the general public.
An independently owned and managed business that does not dominate its market.
Business owned and usually operated by one person who is responsible for all of its debts.
Strategy of setting up one or more corporate units as new, independent corporations.
A share of ownership in a corporation.
stockholders (or shareholders):
Those who own shares of stock in a company.
An enterprise in which two or more persons or companies temporarily join forces to undertake a particular project.
One that is owned by another corporation.
An offer to buy shares made by a prospective buyer directly to a corporation's shareholders.
A person who invests in a business is liable for all debts incurred by the business; personal possessions can be taken to pay debts.
A merger of two firms that have previously had a buyer—seller relationship.
The U.S. government sets aside some of its income from payroll taxes to fund Social Security, which is a
program that aims to ensure that elderly and disabled people do not live in poverty. This is an example of
A. a trust fund.
B. income tax.
C. the national debt.
D. defense spending - Correct
After preparing her business's cash flow statement, Jackie determines that the business will have a
deficit for the next few weeks. What is the best way for Jackie to cover her expenses?
A. Sell assets
B. Close the business temporarily
C. Hire additional salespeople
D. Obtain a loan - Correct
A characteristic of managerial accounting is that it focuses on
A. capturing the business's day-to-day financial activities. - Correct
B. reporting the business's long-term investment goals.
C. developing the business's annual report.
D. preparing and submitting the business's tax forms.
If a business negotiates a 3.6% discount rate and has credit card sales this month of $78,450, what
amount does it owe the bank?
D. $2,824.20 - Correct
Calculate the amount of additional capital a business needs to obtain in order to purchase a new piece of
equipment that costs $250,000 if a bank will loan 75% of the price and the business has $20,000 in
B. $42,500 - Correct
What is often the best source of credit for business start-ups?
A. Traditional lenders
B. Commercial banks
C. Stock market
D. State or local governments - Correct
A small restaurant wants to expand, but first it needs to raise funds. John wants to raise capital through
debt financing, but his partner, Damien, isn't sure that's a good idea. What is one downside of debt
financing that Damien could cite to prove his point to John?
A. Shareholders will own part of their business.
B. They will have to pay interest on the borrowed amount. - Correct
C. They will need to sell stock in their business.
D. They will be required to repay the money immediately.
A characteristic of a business's current assets that are listed on financial statements is that they are
A. liquid. - Correct
What is the base amount used for vertical analysis of items on the income statement?
A. Total assets
B. Total income
C. Total liabilities and equity
D. Net sales - Correct
When employees use mobile devices to access work information from out of the office, they often
A. get viruses on their mobile devices.
B. protect company data more than they would in the office.
C. purposely share company data with non-employees.
D. put company data at risk by using unsecured Wi-Fi networks. - Correct
Which of the following is a common risk of innovation:
A. Competitive advantage
B. Economic downturn
C. Paradigm shift
D. Loss of jobs - Correct
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