3.1 - Forms of Business Organization

Match the following terms with the correct defintion.

• Inventory

• A stock of finished goods and parts in reserve

• Unlimited Liability

• Main disadvantage of a sole proprietorship, owner is personally and fully responsible for all losses and debts of the business.

• Sole Proprietorship

• A business that is jointly owned by two or more persons.

• General Partnership

• Most common form of partnerships in a business, all partners are responsible for management and financial obligations.

• Partnership

• Most common form of business org. in the US, owned and run by a single individual.

Match the following terms with the correct defintion.

• Limited Partnership

• Shares are sold to these people/investors.

• Limited Life

• A form of business organization recognized by law as a separate legal entity

• Corporation

• A disadvantage of sole proprietorship, the firm legally ceases to exist when the owner dies, quits, or sells.

• Stock

• Ownership certificates in the firm

• Shareholders

• At least one partner is not active in the daily running of the business.

Match the following terms with the correct defintion.

• Dividend

• A government document that gives permission to create a corporation.

• Preferred Stock

• Written promise to repay the amount borrowed at a later date.

• Common Stock

• Check that transfers a portion of the corporate earnings.

• Charter

• Represents nonvoting ownership shares of the corporation.

• Bond

• Basic ownership of a corporation.

Match the following term with the correct definition.

• Interest

• The amount borrowed.

• Stockholder

• The price paid for the use of another's money.

• Double Taxation

• A disadvantage of corporations in regards to taxation.

• Proprietorship

• Shares are sold to these investors (another term).

• Principal

• Business owned and run by a single individual.

Which of the following is not an advantage of a proprietorship?

• Owner can keep the profits of successful management.

• Simple and easy management

• A lot of liability on the owner

• Does not have to pay separate business income taxes.

Which of the following is not a disadvantage of a proprietorship?

• The size and efficiency

• Psychological satisfaction people get

• Limited life of the proprietorship

• Difficulty attracting quality employees

Which of the following is not an advantage of a partnership?

• The ease of the startup

• Lack of special taxes on a partnership

• Attract capital more easily

• Responsibility for each otehr

Which of the following is not a disadvantage of a corporation?

• Unlimited life

• Difficulty of getting a charter

• Owners have little say in how the business is run

• More government regulation

When does the corporation continue to exist even after there has been a change in ownership?

• Limited Life

• Unlimited Life

• Double Taxation

• Principal

According to the graphic, who typically selects the President of a company?

• Shareholders

• Vice-President of Production

• Vice-President of Sales

• Board of Directors