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Foundations of Business Chapter 4 Vocab Review

Terms in this set (38)

advantages of a corporation
Limited liability, Ease of raising capital, Ease of transfer of ownership, Perpetual life, Specialized management
advantages of a partnership
ease of start-up, availability of capital and credit, personal interest, combined business skills and knowledge, retention of profits, and no special taxes.
advantages of sole proprietorship
ease of start-up, pride of ownership, retention of all profits by the sole proprietor, flexibility, and possible tax advantages.
Alien corporation
a corporation chartered by a foreign government and conducting business in the United States
Board of directors
the top governing body of a corporation, the members of which are elected by the stockholders
Closed corporation
a corporation whose stock is owned by relatively few people and is not sold to the general public
Common stock
stock owned by individuals or firms who may vote on corporate matters but whose claims on profits and assets are subordinate to the claims of others
Conglomerate merger
a merger between firms in completely different industries
Corporate officers
the chairman of the board, president, executive vice presidents, corporate secretary, treasurer, and any other top executive appointed by the board of directors
Corporation
an 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 sue or be sued, and to enter into binding contracts
disadvantages of a corporation
Difficulty and expense of formation, Government regulation and increased paperwork, Conflict within the corporation, Double taxation and Lack of secrecy
disadvantages of a partnership
unlimited liability, management disagreements, lack of continuity, and frozen investments.
disadvantages of sole proprietorship
unlimited liability, lack of continuity, lack of money, limited management skills, and difficulty in hiring employees.
Dividend
a distribution of earnings to the stockholders of a corporation
Domestic corporation
a corporation in the state in which it is incorporated
Double taxation
Corporate profits are taxed twice, once as corporate income and a second time as the personal income of stockholders
Foreign corporation
a corporation in any state in which it does business except the one in which it is incorporated
General partner
a person who assumes full or shared responsibility for operating a business
Horizontal merger
a merger between firms that make and sell similar products or services in similar markets
Hostile takeover
a situation in which the management and board of directors of a firm targeted for acquisition disapprove of the merger
Joint venture
an agreement 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
Leveraged buyout
a financing method that uses borrowed money to pay for the company that is being taken over
Limited liability
a feature of corporate ownership that limits each owner's financial liability to the amount of money that he or she has paid for the corporation's stock
Limited partner
a person who invests money in a business but has no management responsibility or responsibility or liability for losses beyond the amount he or she invested in the partnership
Limited-liability company
a form of business ownership that combines the benefits of a corporation and a partnership while avoiding some of the restrictions and disadvantages of those forms of ownership
Merger
the combining of two corporations or other business entities to form one business
Not-for-profit corporation
a corporation organized to provide a social, educational, religious, or other service rather than to earn a profit
Open corporation
a corporation whose stock can be bought and sold by any individual
Partnership
a voluntary association of two or more persons to act as co-owners of a business for profit
Preferred stock
stock owned by individuals or firms who usually do not have voting rights but whose claims on dividends are paid before those of common-stock owners
Proxy
enabling stockholders to transfer their voting rights to some other individual or individuals in the corporation
S corporation
a corporation that is taxed as though it were a partnership
sole proprietorship
is a business that is owned and usually operated by one person and the simplest form of business to enter, control, and leave.
Stock
the shares of ownership of a corporation
Stockholder
a person who owns a corporation's stock
Syndicate
a temporary association of individuals or firms organized to perform a specific task that requires a large amount of capital
Unlimited liability
a legal concept that holds a business owner personally responsible for all the debts of the business
Vertical merger
a merger between firms that operate at different but related levels in the production and marketing of a product
THIS SET IS OFTEN IN FOLDERS WITH...