Business Final Terms Defined

Business Final Terms Defined - Business Final Multi...

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Business Final Multi Choice (15 True False). 150 Questions 1. Product Life Cycle The pattern of sales and profits over time for a product or product category; consists of an introductory stage, growth stage, maturity, and decline (and death). o Introduction – a product enters the life cycle Frequent product modifications limited distribution heavy promotion Profits are usually small o Growth Sales grow at an increasing rate profits are healthy many competitors enter the market Switches from primary demand promotion to aggressive brand advertising End of the growth phase – prices begin to fall and profit peaks; price reduction result from increased competition and from cost reductions from producing larger quantities of items o Maturity Sales continue to mount but at a decreasing rate Bring out variations of a basic product (line extension) o Decline (and death) Sales and profits fall 2 factors: the rate of change in consumer tastes and rate at which new products enter the market o Death 2. Breakeven The point where revenue equals zero; at equilibrium Revenue=costs No profit or loss
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3. Corporations and Partnerships Corporation – A legal entity with an existence and life separate from its owners, who are not personally liable for the entity’s debts. A corporation is chartered by the state in which it is formed and can own property, enter into contracts, sue and be sued, and engage in business operations under the terms of its charters Taxable entities with a life separate from its owners, who are not personally liable for its debts. Advantages o Limited liability o Ease of transferring ownership o Unlimited life o Tax deductions o Ability to attract financing Disadvantages o Double taxation of profits o Cost and complexity of formation o More government restrictions 3 types of Corporations o C corporation – a conventional or basic form of corporate organization o S corporation – a hybrid entity that is organized like a corporation, with stockholders, directors, and officers, but taxed like a partnership, with income and losses flowing through to the stockholders and taxed as their personal income o Limited Liability Company (LLC) – a hybrid organization that offers the same liability protection as a corporation but may be taxed as either a partnership or a corporation.
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Partnership – an association of two or more individuals who agree to operate a business together for profit. The parties agree, either orally or in writing, to share in the profits and losses of a joint enterprise. General partnership – a partnership which all partners share in the management and profits. Each partner can act on behalf of the firm and has unlimited liability for all its business obligations. Limited partnership – a partnership with one or more general partners who
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Business Final Terms Defined - Business Final Multi...

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