midterm - chapter 5

Question 1

businesses that get supplies from other producers and convert them into products, they sell their products to consumers and other businesses

Answer 1

manufacturers

ex. cereal maker, computer company

Question 2

a business owned and controlled by just one person

Answer 2

sole proprietorship

Question 3

a specific statement of results the business expects to achieve

Answer 3

goal

Question 4

business that complete activities that are consumed by customers rather than offering products for sale

Answer 4

service businesses

Question 5

a business owned and controlled by two or more people who have entered into a written agreement

Answer 5

partnership

Question 6

businesses involved in selling the goods and services of producers to consumers and other businesses

Answer 6

intermediaries

ex. storage center, advertising agency, Macy’s, Target

Question 7

a written contract granting permission to operate a business to sell products and services in a prescribed way

Answer 7

franchise

Question 8

guidelines used in making consistent decisions

Answer 8

policies

Question 9

What are the pros and cons of corporation?

Answer 9

• pros: owners are employees so not responsible for any lawsuits or debt
• cons: difficult to start, must meet more legal requirements, not all owners have decision making privledge, only board of directors decide how profits are shared

Question 10

The people who make the major policy and financial decisions in a corporation are the

• investors
• board of directors
• managers
• owners

Answer 10

board of directors

Question 11

a business owned and controlled by 2 or more people who have entered into an agreement

Answer 11

partnership

Question 12

What are the pros and cons of a franchise?

Answer 12

• pros: don’t have to come up with logo, brand name, or products; can expand using investments made by other people
• cons: large initial capital required, no freedom for creativity, must buy products from franchiser which can be expensive, franchisee receives business profits

Question 13

a short, specific written statement of the reason a business exists and what it wants to accomplish

Answer 13

mission statement

Question 14

The form of ownership that gives one person sole control over all business decisions is the

• proprietorship
• partnership
• corporation
• franchise

Answer 14

proprietorship

Question 15

• a group of people who oin to do some activity that benefits the public
• they work in areas such as education, health care, charity or the arts

Answer 15

nonprofit corporation

Question 16

• offers the limited liability of a corporation
• all income is passed through to the owners based ontheir investment and is taxed on their individual tax returns

Answer 16

S-corporation

Question 17

What are the pros and cons of sole proprietorship?

Answer 17

• pros: easy to start, total control over business, receives all profits, tax benefits
• cons: have to do it all on your own, can be sued, responsible for debts if the business fails

Question 18

a written agreement among all owners that specifies the rules and procedures that guide ownership and operations

Answer 18

partnership agreement

Question 19

the people who make the major policy and financial decisions for a corporation

Answer 19

board of directors

Question 20

businesses involved in selling the goods and services of producers to consumers and other businesses

Answer 20

intermediaries

Question 21

a business carries out activities that are consumed by its customers

Answer 21

service business

ex. dentists, physicians, lawyers, painters, movers, internet service providers

Question 22

What is the size of a typical American business?

Answer 22

• most US businesses are very small
• most businesses have no employees other than the owner

Question 23

a written legal document that identifies ownership and operating procedures and conditions for the business

Answer 23

articles of incorporation

Question 24

What are the roles of busineses in the US economy?

Answer 24

• the most important role of busineses is to make and distribute products and services needed by consumers, government and other businesses
• businesses provide employment for millions of people
• employee wages are then used to purchase goods and services
• profits earned by businesses are used to compensate owners and investors
• businesses pay taxes to federal, state and local governments
• government then spend these taxes to provide services such as clean water, well maintained streets, police, hospitals and schools

Question 25

Which of the following is not one of the common activities of all businesses? * producing goods and services * employing and training personnel * marketing goods and services * maintaining business records

Answer 25

producing goods and services | (not all businesses PRODUCE)

Question 26

What are the 5 types of businesses?

Answer 26

1. producer 2. extractor 3. manufacturer 4. intermediary 5. service

Question 27

How do businesses impact communities?

Answer 27

* when new business opens, hires new employees who get paid wages * also buy goods and services from other businesses in area * employees and businesses then spend their money to purchase things * money spent may result in the need for more employees in community * when a large business opens like Target or Walmart, other businesses move to the area and more and more jobs become available

Question 28

What is the purpose of businesses?

Answer 28

* to make the goods and services people use every day * includes products and services used by other businesses and those needed by individual consumers

Question 29

* provides liability protection for owners * it has a simpler set of organizing and operating requirements than a corporation * no articles of incorporation or bylaws are needed * a simpler document much like a partnership agreement must be developed

Answer 29

Limited Liability Company (LLC)

Question 30

a partnership that identifies some investors who cannot lose more than the amount of their investment, but they are not allowed to participate in the day-to-day management of the business.

Answer 30

Limited Liability Partnership

Question 31

a unique business organization by two or more other businesses to operate for a limited time and for a specific project, it is a type of partnership

Answer 31

joint venture

Question 32

What are the 5 forms of business ownership?

Answer 32

1. sole proprietorship 2. partnership 3. corporation 4. franchise 5. nonprofit corporation

Question 33

What are the pros and cons of partnership?

Answer 33

* pros: easy to start, owners share responsibility * cons: have to share profits, must agree with each other, all partners responsible for debts if business fails

Question 34

a separate legal entity, formed by documents filed with the state, which is owned by one or more shareholders and managed by a board of directors

Answer 34

corporation

Question 35

a business that takes resources from nature for direct consumption or for use in developing other products

Answer 35

extractor ex. oil drilling, mining coal, farming

Question 36

one who has no explicit or implicit contract for long term employment

Answer 36

contingent worker

Question 37

How has the US job market changed?

Answer 37

* US experienced a cycle of employment growth and decline * careers shifting from manufacturing and agriculture work to service jobs * employment also declines during recessions and grows during recoveries

Question 38

A special form of business organization that combines advantages of a corporation and a partnership is a * franchise * nonprofit corporation * cooperative * limited liability company

Answer 38

limited liability company

Question 39

descriptions of the way work is to be done

Answer 39

procedures

Question 40

The largest number of US businesses employ * more than 100 people * between 50 and 100 people * between 10 and 20 people * no employees other than the owner

Answer 40

no employees other than the owner

Question 41

individuals and organizations that determine what products and services will be available for sale

Answer 41

producers ex. extractors, manufacturers

Question 42

What are the 6 business activities?

Answer 42

1. Generating Ideas - new businesses beginw ith new idea, businesses have to continue to improve and develop new ideas 2. Raising Capital - need money to operate, money comes from owners and loans 3. Employing and Training Personnel - hire and train employees, new employees are trained to do their jobs correctly 4. Buying Goods and Services - businesses buy goods and services, use purchases for their own operation 5. Marketing Goods and Services - if no marketing, products and services may be unsold 6. Maintaining Business Records - keep records to track performance, make decisions, track customer's orders and payments, submit to government

Question 43

What are the 5 key stakeholders in a business?

Answer 43

1. Who are the owners? 2. Who are the creditors? 3. Who are the employees? 4. Who are the suppliers? 5. Who are the customers?

Question 44

a diagram that shows the structure of an organization, classifications of jobs, and the relationships among those classifications

Answer 44

organization chart

Question 45

A retailer is an example of a(n) * extractor * producer * intermediary * service business

Answer 45

intermediary