FHS PFLE 5F business organization characteristics

Front

What is a business organization (firm)?

Back

An establishment formed to bring goods and services to the market

Answer explanation

A business organization (firm) is an establishment formed to bring goods and services to the market, making it the correct choice.

Front

What is liability?

Back

A legal obligation to pay debts/injury settlements incurred by the business

Answer explanation

Liability refers to the legal obligation of a business to pay debts or injury settlements, making it the correct choice in this context.

Front

What is a sole proprietorship?

Back

A business owned and run by one person.

Answer explanation

A sole proprietorship is a business owned and run by one person, making it the correct choice among the options provided.

Front

What might be some of the advantages of operating as a sole proprietorship?

Back

Easy to start up

Answer explanation

Operating as a sole proprietorship is advantageous because it is easy to start up, requiring minimal paperwork and legal formalities.

Front

What is a corporation?

Back

A separate legal entity owned by shareholders with limited liability.

Answer explanation

A corporation is a separate legal entity owned by shareholders with limited liability, meaning the shareholders are not personally responsible for the company's debts or liabilities beyond their investment.

Front

What happens when a corporation sells shares of the company?

Back

The company's revenue increases, but owners lose control of the company.

Answer explanation

When a corporation sells shares, it increases revenue but dilutes ownership control among shareholders.

Front

What are the three types of business organizations?

Back

partnership, sole proprietorship, corporation

Front

If two wireless phone companies merged to form one new company.

Back

Horizontal Merger

Front

A disadvantage to operating a business as a partnership might be that

Back

the partners must get along and work well together.

Front

The joining of two or more businesses involved in different stages of producing the same good/service.

Back

Vertical Merger