AP Business: Forms of Business Ownership flashcards

Question 1

What is it called when one corporation or an investor group buys a target company, usually through talks with that company's board?

Accepted Answer

Acquisition

Question 2

Who are the people that stockholders elect to manage a corporation overall, setting major goals and policies, hiring officers, and overseeing operations and finances?

Accepted Answer

Board of directors

Question 3

Which merger joins firms whose lines of business are unrelated, in order to spread risk?

Accepted Answer

Conglomerate merger

Question 4

What legal entity is formed by suppliers, customers or others who share interests, to lower costs and gain economic power, and pays all profits to its member-owners in proportion to their contributions?

Accepted Answer

Cooperative

Question 5

What is a legal entity that exists apart from its owners, whom its debts do not make personally liable, and that is chartered by a state?

Accepted Answer

Corporation

Question 6

What is the contract that sets the rules, the franchisor's services and the financial terms of a franchising arrangement, and lets the franchisee use the franchisor's name, trademark and logo?

Accepted Answer

Franchise agreement

Question 7

In franchising, who is the person or company that sells the franchisor's goods or services within a given territory?

Accepted Answer

Franchisee

Question 8

What do we call a business organization built on an arrangement where a franchisor supplies the concept and a franchisee sells the goods or services within a given territory?

Accepted Answer

Franchising

Question 9

In franchising, which party provides the franchisee with the concept for the product or service?

Accepted Answer

Franchisor

Question 10

Which partners are fully liable without limit for the firm's business debts and obligations and run its operations?

Accepted Answer

General partners

Question 11

What is a partnership in which every partner shares management and profits, may bind the firm by their acts, and has unlimited liability for its obligations?

Accepted Answer

General partnership

Question 12

Which merger joins firms operating at an identical stage of one industry, to cut costs, widen product offerings or reduce competition?

Accepted Answer

Horizontal merger

Question 13

What is a takeover of a corporation financed with large amounts of borrowed money, which outside investors or the corporation's own management can start?

Accepted Answer

Leveraged buyout (LBO)

Question 14

What hybrid business form gives owners the liability protection of a corporation but can be taxed either as a partnership or as a corporation?

Accepted Answer

Limited liability company (LLC)

Question 15

Which partners have liability limited to the amount they invested, help finance the business, and do not take part in its operations?

Accepted Answer

Limited partners

Question 16

What is a partnership with at least one general partner with unlimited liability and at least one partner whose liability is capped at the amount invested?

Accepted Answer

Limited partnership

Question 17

What is the combination of two or more firms into one new company?

Accepted Answer

Merger

Question 18

What is it called when two or more individuals agree to run a business together for profit?

Accepted Answer

Partnership

Question 19

What hybrid entity has a corporate structure of stockholders, directors and officers but is taxed like a partnership, passing its income and losses through to stockholders' personal income?

Accepted Answer

S corporation

Question 20

What is a business set up, owned and run, and often financed, by one person?

Accepted Answer

Sole proprietorship

Question 21

What do we call those who own a corporation by holding shares of its stock, which carry certain rights?

Accepted Answer

Stockholders (shareholders)

Question 22

Which merger joins firms operating at different stages of one industry, to control supplies of resources or reach different markets?

Accepted Answer

Vertical merger

Question 23

Which form of business leaves the owner personally responsible for all of the firm's debts, even beyond the firm's value, because owner and company are legally the same?

Accepted Answer

Sole proprietorship

Question 24

What tax problem hits a C corporation's profits: they are taxed at the company level and again when paid out to stockholders as dividends?

Accepted Answer

Double taxation

AP Business: Forms of Business Ownership flashcards

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