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Econ Chapter 3 Vocab
Business Organizations
| Term | Definition |
|---|---|
| Sole Proprietorship | Business owned and run by a single person who has all the rights to all profits and unlimited liability for all debts of the firm |
| Proprietorship | business owned and run by a single person who has all the rights to all profits and unlimited liability for all debts of the firm |
| Unlimited Liability | requirement that an owner is personally and fully responsible for all losses and debts of the business |
| Inventory | stock of finished goods and parts held in reserve |
| Limited Life | Situation in which a firm ceases to exist when an owner dies, quits, or sells the business |
| Partnership | unincorporated business owned and operated by two or more ppl who share the profits and responsibility for debt |
| General Partnership | form of partnerships where all partners are equally responsible for management and debts |
| Limited Partnership | form of partnership where one or more partners are not active in the daily running of the business and have limited responsibility for debt |
| Corporation | form of business organization recognized by law as a separate legal entity |
| Charter | written government approval to establish a corporation |
| Stock | certificate of ownership in a corporation |
| Stockholders | ppl who own a share or shares of stock in a corporation |
| Shareholders | ppl who own a share or shares of stock in a corporation |
| Dividend | check that transfers a portion of the company profits to stockholders, usually quarterly |
| Common Stock | most frequently used form of corporate ownership, with one vote per share for stockholders |
| Preferred Stock | form of corporate ownership without vote, in which stockholders get investment back before common stockholders |
| Bond | formal contract to repay borrowed money with interest |
| Principal | amount borrowed when getting a loan or issuing a bond |
| Interest | payment made for the use of borrowed money |
| Double Taxation | taxation of dividends both as corporate profit and personal income |
| Merger | combination of two or more businesses to form a single firm |
| Income Statement | Report showing a firm’s sales, expenses, net income, and cash flowers for a certain period, usually three months or a year |
| Net Income | Common measure of business profits determined by subtracting all expenses, including taxes, from revenue |
| Depreciation | Gradual wear on capital goods |
| Cash Flow | total amount of new funds a business generates from operations |
| Horizontal Merger | Combination of two or more firms producing the same kind of product |
| Vertical Merger | Combination of firms involved in different stages 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 organization that operates like a business but does not seek financial gain |
| Cooperative | nonprofit association performing some kind of economic activity for the benefit of its members |
| Co-op | nonprofit association performing some kind of economic activity for the benefit of its members |
| Credit Union | nonprofit services cooperative that accepts deposits, makes loans, and provides other financial service |
| Labor Union | organization that works for its members’ interests concerning pay, working conditions, and benefits |
| Collective Bargaining | negotiations between union and company representatives over pay, benefits, and other job-related matters |
| Professional Association | nonprofit organization of professional or specialized workers seeking to improve working conditions, skill levels, and public perception of its professio |
| Chamber of Commerce | nonprofit organization of local business formed to promote their interests |
| Better Business Bureau | business-sponsored nonprofit organization providing info on local companies to consumers |
| Public Utility | company providing an essential service such as water or electricity to consumers |
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