Economics Ch.3 Sec. 1 Key Terms

Front 1

sole proprietorship

Back 1

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 United States.

Front 2

Proprietorship

Back 2

A business owned by one person

Front 3

Unlimited Liability

Back 3

requirement that an owner is personally and fully responsible for all losses and debts of a business; applies to proprietorships, general partnerships.

Front 4

Inventory

Back 4

stocks of goods held in reserve; includes finished goods waiting to be sold and raw materials to be used in production

Front 5

limited life

Back 5

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.

Front 6

Partnership

Back 6

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 partnerships

Front 7

Limited Partnership

Back 7

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.

Front 8

Bankruptcy

Back 8

Court-granted permission to an individual or business to cease or delay payment on some or all debts for a limited amount of time.

Front 9

Corporation

Back 9

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 contracts, sue and be sued.

Front 10

Charter

Back 10

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.

Front 11

Stock

Back 11

certificate of ownership in a corporation; common or preferred stock

Front 12

Stockholder

Back 12

person who owns a share or shares of stock in a corporation; same as shareholders

Front 13

Shareholder

Back 13

person who owns a share of stocks in a corporation

Front 14

Dividend

Back 14

a check representing a portion of the corporate earnings to each stockholder

Front 15

Bond

Back 15

formal contract to repay borrowed money and interest on the borrowed money at regular future intervals

Front 16

Principal

Back 16

Amount borrowed when getting a loan or issuing a bond

Front 17

Interest

Back 17

payment made for the use of borrowed money; usually paid at periodic intervals for long-term bonds or loans

Front 18

Double Taxation

Back 18

feature of taxation that allows stockholders' dividends to be taxed both as corporate profit and as personal income.