Micro 9

2. Exam 2
Review

3. Microeconomics
Lecture 9
Basic Business Structure

4. Questions?

5. Capital will go where it is wanted,
and it will stay where it is well
treated. It cannot be driven; it can
only be attracted.

6. Capital will go
where it valued the
most

7. Firm
An organization that
organizes the six capitals

8. Types of Firms
Proprietorships
Partnerships
Corporations

9. Issues
Complexity
Liability
Taxes
Raising Money
Control

10. Proprietorship
one owner
easy to create
one tax
unlimited liability
hard to raise money
ends with death

11. Partnership
two or more owners
easy to create
combine talents
all are liable
disagreements
ends with death

12. Corporation
one to many owners
limited liability
raise financial capital
does not die with shareholders
harder to create
more regulation
double taxation

13. Number Revenues
Proprietorships 70% 4%
Partnerships 10% 16%
Corporations 20% 80%

14. Dividends
portion of profits paid to
shareholders

15. Raising Money
Retained Earnings
Sell Ownership Shares
Borrow

16. Financial Statements
Income Statement
Balance Sheet

17. Income Statement
Revenue
- Expenses
= Net Income
What happened between two dates?

18. Balance Sheet
What I own
What is the status on a specific date?
What I owe
What I am worth
=
Assets
Liabilities
Net Worth
Must balance