Business ch 5 Flashcards

Terms Definitions
Sole Proprietorship
A business that is owned and usually managed by one person
A legal form of business with two or more owners
A legal entity with authority to act and have liability apart from its owners
Unlimited Liability
The responsibility of business owners for all of the debts of the business
General Partnership
A partnership in which all owners share in operating the business and in assuming liability for the business’s debts
Limited Partnership
A partnership with on or more general partners and one or more limited partners
General Partner
An owner (partner) who has unlimitedlibality and is acting in managing the firm
Limited Partner
An owner who invests money in the business but does not have any management responsibility or liability for losses beyond the investment
Limited Liability
The responsibility of a business’s owners for losses only up to the amount they invest limited partners and shareholders (stockholders) have limited liability
Mather Limited Partnership (MLP)
A partnership that looks much like a corporation (in that it acts like a corporation and is traded on a stock exchange) but is taxed like a partnership and thus avoids the corporate income tax
Limited Liability Partnership
A partnership that limits partners’ risk of losing their personal assets to only their own acts and omissions and to the acts and omissions of people under their supervision.
Conventional Corporations (C Corp)
A state chartered legal entity with authority to act and have liability separate from its owners
S Corporation
A unique government creation that looks like a corporation but is taxed like sole proprietorships and partnerships
Limited Liability Company (LLC)
A company similar to an S corporation but without the special eligibility requirements
The result of two firms forming one company
One company’s purchase of the property and obligations of another company
Vertical Merger
The joining of two companies involved in different stages of related businesses
Horizontal Merger
The joining of two firms in the same industry
Conglomerate Merger
The joining of firms in completely unrelated industries
Leveraged Buyout (LBO)
An attempt by employees, management, or a group of investors to purchase an organization primarily through borrowing
Franchising Agreement
An arrangement whereby someone with a good idea for a business sells the right to use the business name and sell a product or service to others in a given territory
A company that develops a product concept and sells others the right to make and sell the product
A person who buys a franchise
A business owner and controlled by the people who use it – producers, consumers, or workers with similar needs who pool their resources for mutual gain.
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