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Bus 010 Understanding Business - Chapter 5


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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 separate from its owners.
Unlimited liability
The responsbility 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 one or more general partners and one or more limited partners.
General Partner
An owner (partner) who has unlimited liability and is active 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 the amount they invest; limited partners and shareholders have limited liability.
Master 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 (LLP)
A partnership that limits partners' risk of losing their personal assets to only their own oacts and omissions and to the acts and omissions of people under their supervision.
Conventional (C) Corporation
A state-chartered legal entity with authority to act and have the 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.
Franchise agreement
An arragnement whereby someone with good idea for a business sells the rights 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 rights to make and sell the products.
A person who buys a franchise.
A business owned and controlled by the people who use it - producers, consumers, or workers with silimar needs who pool their resources for mutual gain.

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