Sole proprietorship/proprietorship
unincorporated business owned and run by a single person who has rights to all profits and unlimited liability for all debts of the firm; most common form of business organization in the U.S.
General partnership
partnership in which all partners are responsible for the management and financial obligations of the business
unlimited liability
requirement that an owner is personally and fully responsible for all losses and debts of a business; applies to proprietorships, general partnerships
inventory
stock of goods held in reserve; includes finished goods waiting to be sold and raw materials to be used in production
limited life
situation in which a firm legally ceases to exist when an owner dies, quits, or a new owner is added; applies to sole proprietorships and partnerships
partnership
unincorporated business owned and operated by two or more people who share the profits and have unlimited liability for the debts and obligations of the firm; same as general partnership
limited partnership
form of partnership where one or more partners are not active in the daily running of the business, and whose liability for the partnership's debt is restricted to the amount invested in the business
bankruptcy
ourt-granted permission to an individual or business to cease or delay payment on some or all debts for a limited amount of time
corporation
form of business organization recognized by law as a separate legal entity with all the rights and responsibilities of an individual, including the right to buy and sell property, enter into legal contacts, sue and be sued
charter
written government approval to establish a corporation; includes company name, address, purpose of business, number of shares of stock, and other features of the business
stock
certificate of ownership in a corporation; common or preferred stock
stockholder/shareholder
person who owns a share or shares of stock in a corporation; same as shareholders
dividend
heck paid to stockholders, usually quarterly, representing portion of corporate profits
bond
ormal contract to repay borrowed money and interest on the borrowed money at regular future intervals
principal
amount borrowed when getting a loan or issuing a bond
interest
payment made for the use of borrowed money; usually paid at periodic intervals for long-term bonds or loans
double taxation
feature of taxation that allows stockholders' dividends to be taxed both as corporate profit and as personal income
merger
combination of two or more business enterprises to form a single firm
income statement
report showing a business's sales, expenses and profits for a certain period, usually three months or a year
net income
measure of business profits determined by subtracting all expenses, including taxes, from revenues
depreciation
gradual wear on capital goods during production
cash flow
total amount of new funds the business generates from operations; broadest measure of profits for a firm, includes both net income and non-cash charges
horizontal merger
combination of two or more firms producing the same kind of product
vertical merger
combination of firms involved in different steps of manufacturing or marketing
conglomerate
firm with four or more businesses making unrelated products, with no single business responsible for a majority of its sales
multinational
corporation producing and selling without regard to national boundaries and whose business activities are located in several different countries
nonprofit organization
economic institution that operates like a business but does not seek financial gain; schools, churches, community service organizations
cooperative (co-op)
nonprofit organization performing some kind of economic activity for the benefit of its members
credit union
nonprofit service cooperative that accepts deposits, makes loans, and provides other financial services
labor union
organization that works for its members' interests concerning pay, working hours, health coverage, fringe benefits, other job related matters
collective bargaining
process of negotiation between union and management representatives over pay, benefits, and job-related matters
professional association
nonprofit organization of professional or specialized workers seeking to improve working conditions, skill levels, and public perceptions of its profession
chamber of commerce
nonprofit organization of local businesses whose purpose is to promote their interests
Better Business Bureau
business-sponsored nonprofit organization providing information on local companies to consumers
public utility
company providing essential services such as water and electricity to consumers, usually subject to some government regulations
common stock
represents the basic ownership of a corporation; usually receives one vote per share
Preferred stock
represents nonvoting ownership of shares of the corporation