Chapter Introduction
Section 1: Forms of
Business
Organization
Section 2: Business Growth
and Expansion
Section 3: Nonprof...
You have an idea for a new
product and you want to set
up a company to market it.
You need $5,000 to get
started with prod...
1. The profit motive acts as
an incentive for people to
produce and sell goods
and services.
2. Governments and
institutio...
Section Preview
In this section, you will learn about the
advantages and disadvantages of various forms
of business organi...
Content Vocabulary
• sole
• general
proprietorship
partnership
• proprietorship • limited
partnership
• unlimited
• corpor...
Academic Vocabulary
• comprise

• entity
What incentive is there for individuals
to produce and sell goods and
services?

C. Private property rights
A

0%

0%

0%
...
Sole Proprietorships
Sole proprietorships are easy
to start, but owners have
unlimited liability.
Sole Proprietorships (cont.)
• The most common form of business
organization in the U.S. is the sole
proprietorship or pro...
Sole Proprietorships (cont.)
• Advantages
– The easiest form of business to start—
few requirements
– Decisions do not req...
Sole Proprietorships (cont.)
• Advantages
– Psychological factor of being own boss
– Easy to get out of business
Sole Proprietorships (cont.)
• Disadvantages
– Owner has unlimited liability.
– Difficult to raise capital
– Size and effi...
Sole Proprietorships (cont.)
• Disadvantages
– Difficult to attract qualified employees
– Larger employers can offer more ...
Which is not considered an advantage
to being a sole proprietor?
A. Retains all profits
B. Unlimited liability

0%
D

0%
C...
Partnerships
In a partnership, each partner
fully shares responsibility for
the operation of the business
and all profits ...
Partnerships (cont.)
• A partnership has many of the same
advantages and disadvantages of a sole
proprietor.
• Partnership...
Partnerships (cont.)
• Types of partnerships
– General partnership
– Limited partnership
Partnerships (cont.)
• Advantages to operating a partnership
– Ease of startup
– Formal legal papers called articles of
pa...
Partnerships (cont.)
• Advantages to operating a partnership
– More efficient operations that come with
increased size
– E...
Partnerships (cont.)
• Disadvantages to operating a partnership
– In a general partnership, each partner is
responsible fo...
In which type of partnership would
you prefer to be a partner?
A. General partnership
B. Limited partnership
A. A
B. B
0%
...
Corporations
Corporations are one of the
most important forms of
business and can easily raise
large amounts of financial
...
Corporations (cont.)
• A corporation is a formal, legal entity all
its own.
• Individuals who wish to incorporate must
fil...
Corporations (cont.)
• If a corporation is approved, the
government issues a charter stating the
purpose of the business, ...
Corporations (cont.)
• Selling shares of stock to stockholders, or
shareholders, is a way for a corporation
to raise capit...
Corporations (cont.)
• There are two types of stock that
corporations issue.
– Common stock
– Preferred stock
• Type of st...
Corporations (cont.)
• Advantages to a corporation structure
– Ease of raising capital—sell more stock
or issue bonds
• Th...
Corporations (cont.)
• Advantages to a corporation structure
– Owners have limited liability.
– Directors can hire profess...
Corporations (cont.)
• Disadvantages to a corporation structure
– Detailed records need to be kept for
payment of taxes.
–...
Corporations (cont.)
• Disadvantages to a corporation structure
– Owners or shareholders have little voice
in business ope...
Some firms incorporate just to take
advantage of which corporate
characteristic?
A. Unlimited life

0%
D

0%
C

D. All of ...
Section Preview
In this section, you will learn how businesses
grow through merging with other companies or by
reinvesting...
Content Vocabulary
• merger

• depreciation

• vertical merger

• income
statement

• cash flow

• conglomerate

• horizon...
What is the best way for a company
to grow?
A. Invest in self
B. Merge with another company

0%

0%
C

0%

B

A. A
B. B
C....
Business Growth and Expansion
• Investing profits in new plants and
equipment is one way to grow a business.
A merger is a...
Growth Through Reinvestment
Business owners can use
their profits to update and
expand their firms.
Growth Through Reinvestment (cont.)
• Financial statements are used to keep
track of a business’ operations.
– Income stat...
Growth Through Reinvestment (cont.)
– Depreciation—a non-cash charge of
capital goods
– An increase in depreciation lowers...
Growth Through Reinvestment (cont.)
• Corporations with positive cash flow may
issue dividends and reinvest in new plants,...
Growth Through Reinvestment (cont.)
• Reinvesting in the business increases
production and generates more sales.
• Positiv...
Which of the following is included on
a net income statement?
A. Sales revenue
B. Expenses

0%

0%
D

A
B
C
0%
D

C

A

D....
Growth Through Mergers
Mergers allow firms to quickly
grow in size.
Growth Through Mergers (cont.)
• When two companies merge, one gives up
its separate legal identity.
• The name of the new...
Growth Through Mergers (cont.)
• Two types of mergers
– Horizontal merger
– Vertical merger

Types of Mergers
Growth Through Mergers (cont.)
• Reasons to merge
– Faster growth
– Become more efficient
– Better product manufacturing o...
Growth Through Mergers (cont.)
• A corporation may become so large
through mergers and acquisitions that it
turns into a c...
Growth Through Mergers (cont.)
• Large corporations that become
international in scope are referred to as
multinationals.
Growth Through Mergers (cont.)
• Multinationals
– Have manufacturing or service
operations in several countries
– Are subj...
Growth Through Mergers (cont.)
• Multinationals are generally welcomed in a
country because they bring new
technology, gen...
Growth Through Mergers (cont.)
• Critics argue that multinationals often pay
low wages, export natural resources,
interfer...
Growth Through Mergers (cont.)
• Economists, however, welcome the lowercost production and higher-quality output
that glob...
Which of the following is a
conglomerate in Japan?
A. Samsung
B. Sony

0%
D

A

0%

A
B
C
0%
D

C

D. Gold Star

A.
B.
C.
...
Section Preview
In this section, you will learn about the economic
benefits that cooperatives and other nonprofit
organiza...
Content Vocabulary
• nonprofit
organization
• cooperative
• co-op
• credit union

• labor union
• collective
bargaining
• ...
Can you name any nonprofit
organizations that exist in your
community?
A. Yes
B. No
A. A
B. B

0%
B

A

0%
Nonprofit Organizations
• Most businesses use scarce resources to
produce goods and services in order to
generate a profit...
Community Organizations
and Operatives
A variety of nonprofit
organizations provide a wide
range of goods and services
to ...
Community Organizations
and Operatives (cont.)
• Many community organizations such as
schools, churches, hospitals, and we...
Community Organizations
and Operatives (cont.)
• One common type of nonprofit
organization is the cooperative or co-op.
Community Organizations
and Operatives (cont.)
• Three major types of cooperatives
– Consumer cooperative—members keep
cos...
Community Organizations
and Operatives (cont.)
• Three major types of cooperatives
– Producer cooperative—in the United
St...
Which type of cooperative would
provide insurance to its members?
A. Producer
A. A
B. B
C. C

A

0%

0%

0%
C

C. Service
...
Labor, Professional, and
Business Organizations
Some nonprofit organizations
are formed to promote the
interests of worker...
Labor, Professional, and
Business Organizations (cont.)
• Many other groups besides co-ops
organize nonprofit organization...
Labor, Professional, and
Business Organizations (cont.)
• Many other groups besides co-ops
organize nonprofit organization...
Which nonprofit organization might a
machinist belong to?
A. Labor union
B. Professional association

0%
D

0%
C

A

D. An...
Government
The government provides
some goods and services
while helping to make sure
the economy runs smoothly.
Government (cont.)
• Local, state, and federal governments
operate as nonprofit economic
organizations.
Government (cont.)
• Government plays both a direct and
indirect role in the economy.
– Direct involvement—government
supp...
Government (cont.)
• Government plays both a direct and
indirect role in the economy.
– Indirect involvement includes the
...
How do government organized
nonprofits differ from privately held
nonprofits?
A. Limited life

0%
C

0%
B

A

B. Professio...
Business Organizations Three main forms of
business organizations exist in the United States today.
Growth A company can reinvest its profits or merge
with another firm in order to grow.
Nonprofit Organizations Some organizations work
in a businesslike way to promote the interests of
their members. Unlike bu...
Andrea Jung (1958– )
• first female chief executive officer
(CEO) in Avon Products’ 118-year
history
• ranked #5 on Fortun...
Economic Concepts
Transparencies
Transparency 2 Opportunity Cost &
Trade-Offs
Transparency 3 Productivity
Transparency 5 E...
sole proprietorship
business owned and run by a single
person who has the rights to all profits
and unlimited liability fo...
proprietorship
business owned and run by a single
person who has the rights to all profits
and unlimited liability for all...
unlimited liability
requirement that an owner is
personally and fully responsible for all
losses and debts of the business
inventory
stock of finished goods and parts held
in reserve
limited life
situation in which a firm ceases to
exist when an owner dies, quits, or
sells the business
partnership
unincorporated business owned and
operated by two or more people who
share the profits and responsibility
for ...
general partnership
form of partnership where all partners
are equally responsible for
management and debts
limited partnership
form of partnership where one or
more partners are not active in the
daily running of the business and...
corporation
form of business organization
recognized by law as a separate
legal entity
charter
written government approval to
establish a corporation
stock
certificate of ownership in a
corporation
stockholder
people who own a share or shares of
stock in a corporation
shareholder
people who own a share or shares of
stock in a corporation
dividend
check that transfers a portion of the
company profits to stockholders,
usually quarterly
common stock
most frequently used form of
corporate ownership, with one vote
per share for stockholders
preferred stock
form of corporate ownership without
vote, in which stockholders get their
investments back before common
s...
bond
formal contract to repay borrowed
money with interest
principal
amount borrowed when getting a loan
or issuing a bond
interest
payment made for the use of
borrowed money
double taxation
taxation of dividends both as
corporate profit and personal income
comprise
to be composed of
entity
unit or being
merger
combination of two or more
businesses to form a single firm
income statement
report showing a firm’s sales,
expenses, net income, and cash
flows for a certain period, usually
three m...
net income
common measure of business profits
determined by subtracting all
expenses, including taxes, from
revenues
depreciation
gradual wear on capital goods
cash flow
total amount of new funds a business
generates from operations
horizontal merger
combination of two or more firms
producing the same kind of product
vertical merger
combination of firms involved in
different stages of manufacturing or
marketing
conglomerate
firm with four or more businesses
making unrelated products, with no
single business responsible for a
majori...
multinational
corporation producing and selling
without regard to national boundaries
and whose business activities are
lo...
internally
within
dominant
possessing the most influence and
control
nonprofit organization
economic organization that operates
like a business but does not but does
not seek financial gain
cooperative
nonprofit association performing
some kind of economic activity for the
benefit of its members
co-op
nonprofit association performing
some kind of economic activity for the
benefit of its members
credit union
nonprofit service cooperative that
accepts deposits, makes loans, and
provides other financial services
labor union
organization that works for its
members’ interests concerning pay,
working conditions, and benefits
collective bargaining
negotiation between union and
company representatives over pay,
benefits, and other job-related
matt...
professional association
nonprofit organization of professional
or specialized workers seeking to
improve working conditio...
chamber of commerce
nonprofit organization of local
businesses formed to promote their
interests
Better Business Bureau
business-sponsored nonprofit
organization providing information on
local companies to consumers
public utility
company providing an essential
services such as water and electricity
to consumers
analyze
to break down into parts and study
how each part relates to one another
devoting
giving time or attention
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LOAPUSH Econ ch 3

  1. 1. Chapter Introduction Section 1: Forms of Business Organization Section 2: Business Growth and Expansion Section 3: Nonprofit Organizations Visual Summary
  2. 2. You have an idea for a new product and you want to set up a company to market it. You need $5,000 to get started with production and advertising. Use what you have already learned about the factors of production to create a list of resources you will need and where to find them. Read Chapter 3 to learn about the different ways to organize a business.
  3. 3. 1. The profit motive acts as an incentive for people to produce and sell goods and services. 2. Governments and institutions help participants in a market economy accomplish their financial goals.
  4. 4. Section Preview In this section, you will learn about the advantages and disadvantages of various forms of business organization.
  5. 5. Content Vocabulary • sole • general proprietorship partnership • proprietorship • limited partnership • unlimited • corporation liability • shareholder • dividend • common stock • preferred stock • inventory • charter • bond • limited life • stock • principal • partnership • stockholder • interest • double taxation
  6. 6. Academic Vocabulary • comprise • entity
  7. 7. What incentive is there for individuals to produce and sell goods and services? C. Private property rights A 0% 0% 0% C B. Profit motive A. A B. B C. C B A. Low prices through competition
  8. 8. Sole Proprietorships Sole proprietorships are easy to start, but owners have unlimited liability.
  9. 9. Sole Proprietorships (cont.) • The most common form of business organization in the U.S. is the sole proprietorship or proprietorship. Business Organizations
  10. 10. Sole Proprietorships (cont.) • Advantages – The easiest form of business to start— few requirements – Decisions do not require approval from “higher ups.” – Keep all profits – Does not pay separate business income taxes; business is not a separate entity
  11. 11. Sole Proprietorships (cont.) • Advantages – Psychological factor of being own boss – Easy to get out of business
  12. 12. Sole Proprietorships (cont.) • Disadvantages – Owner has unlimited liability. – Difficult to raise capital – Size and efficiency – May hire several employees to stay open – Cost of carrying minimum inventory – Often has limited managerial skills
  13. 13. Sole Proprietorships (cont.) • Disadvantages – Difficult to attract qualified employees – Larger employers can offer more fringe benefits. – Limited life of business Profiles in Economics: Andrea Jung
  14. 14. Which is not considered an advantage to being a sole proprietor? A. Retains all profits B. Unlimited liability 0% D 0% C A B C 0% D B D. Business is not recognized as a separate legal entity. A. B. C. 0% D. A C. Quick decision making
  15. 15. Partnerships In a partnership, each partner fully shares responsibility for the operation of the business and all profits or losses.
  16. 16. Partnerships (cont.) • A partnership has many of the same advantages and disadvantages of a sole proprietor. • Partnerships are the least numerous form of business organization in the United States.
  17. 17. Partnerships (cont.) • Types of partnerships – General partnership – Limited partnership
  18. 18. Partnerships (cont.) • Advantages to operating a partnership – Ease of startup – Formal legal papers called articles of partnership are usually written. – Ease of management/varied expertise – Lack of special taxes – Easier to attract capital than a proprietorship
  19. 19. Partnerships (cont.) • Advantages to operating a partnership – More efficient operations that come with increased size – Easier to find good employees than a proprietorship
  20. 20. Partnerships (cont.) • Disadvantages to operating a partnership – In a general partnership, each partner is responsible for acts of all partners. – In a limited partnership, limited partner loses original investment. General partners must make up the rest of the loss. – Limited life – Potential for conflict between partners
  21. 21. In which type of partnership would you prefer to be a partner? A. General partnership B. Limited partnership A. A B. B 0% B A 0%
  22. 22. Corporations Corporations are one of the most important forms of business and can easily raise large amounts of financial capital.
  23. 23. Corporations (cont.) • A corporation is a formal, legal entity all its own. • Individuals who wish to incorporate must file with the national government and state where the business will have its headquarters.
  24. 24. Corporations (cont.) • If a corporation is approved, the government issues a charter stating the purpose of the business, specifying the number of shares of stock, and other business information. Stock Ownership
  25. 25. Corporations (cont.) • Selling shares of stock to stockholders, or shareholders, is a way for a corporation to raise capital. • Corporations pay out dividends to shareholders when the corporations become profitable.
  26. 26. Corporations (cont.) • There are two types of stock that corporations issue. – Common stock – Preferred stock • Type of stock purchased determines the ownership rights of the shareholder.
  27. 27. Corporations (cont.) • Advantages to a corporation structure – Ease of raising capital—sell more stock or issue bonds • The amount of money borrowed on a bond is called the principal. • Corporations pay interest on this borrowed money. Corporate Structure
  28. 28. Corporations (cont.) • Advantages to a corporation structure – Owners have limited liability. – Directors can hire professional managers to run daily operations. – Unlimited life – Ease of transferring ownership Corporate Structure
  29. 29. Corporations (cont.) • Disadvantages to a corporation structure – Detailed records need to be kept for payment of taxes. – Double taxation of corporate profits – Difficulty and expense to get a corporate charter Corporate Structure
  30. 30. Corporations (cont.) • Disadvantages to a corporation structure – Owners or shareholders have little voice in business operations. – Subject to more government regulations • Publicly held corporations must register with the federal Securities and Exchange Commission, established in 1934, to regulate the sale of stock. Corporate Structure
  31. 31. Some firms incorporate just to take advantage of which corporate characteristic? A. Unlimited life 0% D 0% C D. All of the above A B 0% C D B C. Limited liability A. B. 0% C. D. A B. Ease of raising capital
  32. 32. Section Preview In this section, you will learn how businesses grow through merging with other companies or by reinvesting profits in themselves.
  33. 33. Content Vocabulary • merger • depreciation • vertical merger • income statement • cash flow • conglomerate • horizontal merger • multinational • net income Academic Vocabulary • internally • dominant
  34. 34. What is the best way for a company to grow? A. Invest in self B. Merge with another company 0% 0% C 0% B A. A B. B C. C A C. Depends on the situation
  35. 35. Business Growth and Expansion • Investing profits in new plants and equipment is one way to grow a business. A merger is another way.
  36. 36. Growth Through Reinvestment Business owners can use their profits to update and expand their firms.
  37. 37. Growth Through Reinvestment (cont.) • Financial statements are used to keep track of a business’ operations. – Income statement—shows how a business uses the revenue it receives from sales to grow through reinvestment – An income statement shows a firm’s net income. Growth Through Reinvestment
  38. 38. Growth Through Reinvestment (cont.) – Depreciation—a non-cash charge of capital goods – An increase in depreciation lowers the earnings before tax but increases cash flow. – Cash flow is the bottom line, a more comprehensive measure of profits. Growth Through Reinvestment
  39. 39. Growth Through Reinvestment (cont.) • Corporations with positive cash flow may issue dividends and reinvest in new plants, equipment, or technology. • Proprietors and partnerships may keep some of the cash flow as reward for risk taking in addition to reinvesting in business.
  40. 40. Growth Through Reinvestment (cont.) • Reinvesting in the business increases production and generates more sales. • Positive cash flow attracts investors.
  41. 41. Which of the following is included on a net income statement? A. Sales revenue B. Expenses 0% 0% D A B C 0% D C A D. All of the above A. B. C. 0% D. B C. Cash flow
  42. 42. Growth Through Mergers Mergers allow firms to quickly grow in size.
  43. 43. Growth Through Mergers (cont.) • When two companies merge, one gives up its separate legal identity. • The name of the new company may reflect the identities of both for public recognition, however.
  44. 44. Growth Through Mergers (cont.) • Two types of mergers – Horizontal merger – Vertical merger Types of Mergers
  45. 45. Growth Through Mergers (cont.) • Reasons to merge – Faster growth – Become more efficient – Better product manufacturing or delivery – Eliminate competition – Change image
  46. 46. Growth Through Mergers (cont.) • A corporation may become so large through mergers and acquisitions that it turns into a conglomerate. • Diversification is the reason why some businesses become conglomerates. • Isolated economic events may affect some product lines but not all of them at the same time. Conglomerate Structure
  47. 47. Growth Through Mergers (cont.) • Large corporations that become international in scope are referred to as multinationals.
  48. 48. Growth Through Mergers (cont.) • Multinationals – Have manufacturing or service operations in several countries – Are subject to laws in each country and may pay taxes to each – Are able to move resources, goods, services, and financial capital across national borders
  49. 49. Growth Through Mergers (cont.) • Multinationals are generally welcomed in a country because they bring new technology, generate jobs and revenue, increase the standard of living, and pay taxes.
  50. 50. Growth Through Mergers (cont.) • Critics argue that multinationals often pay low wages, export natural resources, interfere with local businesses, and alter traditional ways of life in the host country. • Multinationals can demand concessions by threatening to move operations out of the country.
  51. 51. Growth Through Mergers (cont.) • Economists, however, welcome the lowercost production and higher-quality output that global competition brings. • Global competition raises the standard of living for everyone.
  52. 52. Which of the following is a conglomerate in Japan? A. Samsung B. Sony 0% D A 0% A B C 0% D C D. Gold Star A. B. C. 0% D. B C. Daewoo
  53. 53. Section Preview In this section, you will learn about the economic benefits that cooperatives and other nonprofit organizations bring to their members.
  54. 54. Content Vocabulary • nonprofit organization • cooperative • co-op • credit union • labor union • collective bargaining • professional association Academic Vocabulary • analyze • devoting • chamber of commerce • Better Business Bureau • public utility
  55. 55. Can you name any nonprofit organizations that exist in your community? A. Yes B. No A. A B. B 0% B A 0%
  56. 56. Nonprofit Organizations • Most businesses use scarce resources to produce goods and services in order to generate a profit. • Other businesses operate on “not-forprofit” basis and are called nonprofit organizations.
  57. 57. Community Organizations and Operatives A variety of nonprofit organizations provide a wide range of goods and services to communities and members.
  58. 58. Community Organizations and Operatives (cont.) • Many community organizations such as schools, churches, hospitals, and welfare groups are legally incorporated but do not issue stock or pay income taxes. Any surplus earned is used to further their work.
  59. 59. Community Organizations and Operatives (cont.) • One common type of nonprofit organization is the cooperative or co-op.
  60. 60. Community Organizations and Operatives (cont.) • Three major types of cooperatives – Consumer cooperative—members keep costs down by devoting time to operation. – Service cooperative—particular company/agency employees use a credit union.
  61. 61. Community Organizations and Operatives (cont.) • Three major types of cooperatives – Producer cooperative—in the United States, farmers may organize this to sell their produce. Cooperatives
  62. 62. Which type of cooperative would provide insurance to its members? A. Producer A. A B. B C. C A 0% 0% 0% C C. Service B B. Consumer
  63. 63. Labor, Professional, and Business Organizations Some nonprofit organizations are formed to promote the interests of workers and consumers.
  64. 64. Labor, Professional, and Business Organizations (cont.) • Many other groups besides co-ops organize nonprofit organizations to promote the interests of their members. – Labor unions—use collective bargaining when negotiating with management – Professional associations
  65. 65. Labor, Professional, and Business Organizations (cont.) • Many other groups besides co-ops organize nonprofit organizations to promote the interests of their members. – Business associations—chamber of commerce or Better Business Bureau are examples
  66. 66. Which nonprofit organization might a machinist belong to? A. Labor union B. Professional association 0% D 0% C A D. Any of the above A. A B. B C. 0% C 0% D. D B C. Business association
  67. 67. Government The government provides some goods and services while helping to make sure the economy runs smoothly.
  68. 68. Government (cont.) • Local, state, and federal governments operate as nonprofit economic organizations.
  69. 69. Government (cont.) • Government plays both a direct and indirect role in the economy. – Direct involvement—government supplies a good or service that competes with private businesses • Examples: the U.S. Postal Service (USPS), state colleges and universities, and police protection
  70. 70. Government (cont.) • Government plays both a direct and indirect role in the economy. – Indirect involvement includes the regulation of public utilities, financial aid to college students, rent subsidies, and veteran’s checks.
  71. 71. How do government organized nonprofits differ from privately held nonprofits? A. Limited life 0% C 0% B A B. Professional management team is hired to oversee daily A. A operations. B. 0% B C. Congressional, state, or local C. C funds may be necessary to cover any losses.
  72. 72. Business Organizations Three main forms of business organizations exist in the United States today.
  73. 73. Growth A company can reinvest its profits or merge with another firm in order to grow.
  74. 74. Nonprofit Organizations Some organizations work in a businesslike way to promote the interests of their members. Unlike businesses, these nonprofit organizations do not seek to earn a profit.
  75. 75. Andrea Jung (1958– ) • first female chief executive officer (CEO) in Avon Products’ 118-year history • ranked #5 on Fortune magazine’s “50 Most Powerful Women in Business”
  76. 76. Economic Concepts Transparencies Transparency 2 Opportunity Cost & Trade-Offs Transparency 3 Productivity Transparency 5 Economic Institutions and Incentives Select a transparency to view.
  77. 77. sole proprietorship business owned and run by a single person who has the rights to all profits and unlimited liability for all debts of the firm
  78. 78. proprietorship business owned and run by a single person who has the rights to all profits and unlimited liability for all debts of the firm
  79. 79. unlimited liability requirement that an owner is personally and fully responsible for all losses and debts of the business
  80. 80. inventory stock of finished goods and parts held in reserve
  81. 81. limited life situation in which a firm ceases to exist when an owner dies, quits, or sells the business
  82. 82. partnership unincorporated business owned and operated by two or more people who share the profits and responsibility for debts
  83. 83. general partnership form of partnership where all partners are equally responsible for management and debts
  84. 84. limited partnership form of partnership where one or more partners are not active in the daily running of the business and have limited responsibility for debts
  85. 85. corporation form of business organization recognized by law as a separate legal entity
  86. 86. charter written government approval to establish a corporation
  87. 87. stock certificate of ownership in a corporation
  88. 88. stockholder people who own a share or shares of stock in a corporation
  89. 89. shareholder people who own a share or shares of stock in a corporation
  90. 90. dividend check that transfers a portion of the company profits to stockholders, usually quarterly
  91. 91. common stock most frequently used form of corporate ownership, with one vote per share for stockholders
  92. 92. preferred stock form of corporate ownership without vote, in which stockholders get their investments back before common stockholders
  93. 93. bond formal contract to repay borrowed money with interest
  94. 94. principal amount borrowed when getting a loan or issuing a bond
  95. 95. interest payment made for the use of borrowed money
  96. 96. double taxation taxation of dividends both as corporate profit and personal income
  97. 97. comprise to be composed of
  98. 98. entity unit or being
  99. 99. merger combination of two or more businesses to form a single firm
  100. 100. income statement report showing a firm’s sales, expenses, net income, and cash flows for a certain period, usually three months or a year
  101. 101. net income common measure of business profits determined by subtracting all expenses, including taxes, from revenues
  102. 102. depreciation gradual wear on capital goods
  103. 103. cash flow total amount of new funds a business generates from operations
  104. 104. horizontal merger combination of two or more firms producing the same kind of product
  105. 105. vertical merger combination of firms involved in different stages of manufacturing or marketing
  106. 106. conglomerate firm with four or more businesses making unrelated products, with no single business responsible for a majority of its sales
  107. 107. multinational corporation producing and selling without regard to national boundaries and whose business activities are located in several different countries
  108. 108. internally within
  109. 109. dominant possessing the most influence and control
  110. 110. nonprofit organization economic organization that operates like a business but does not but does not seek financial gain
  111. 111. cooperative nonprofit association performing some kind of economic activity for the benefit of its members
  112. 112. co-op nonprofit association performing some kind of economic activity for the benefit of its members
  113. 113. credit union nonprofit service cooperative that accepts deposits, makes loans, and provides other financial services
  114. 114. labor union organization that works for its members’ interests concerning pay, working conditions, and benefits
  115. 115. collective bargaining negotiation between union and company representatives over pay, benefits, and other job-related matters
  116. 116. professional association nonprofit organization of professional or specialized workers seeking to improve working conditions, skill levels, and public perceptions of its profession
  117. 117. chamber of commerce nonprofit organization of local businesses formed to promote their interests
  118. 118. Better Business Bureau business-sponsored nonprofit organization providing information on local companies to consumers
  119. 119. public utility company providing an essential services such as water and electricity to consumers
  120. 120. analyze to break down into parts and study how each part relates to one another
  121. 121. devoting giving time or attention
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