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6 Cards in this Set

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RQ 5-1. What is a sole proprietorship? What are the major advantages and disadvantages of this form of business ownership?
It is a business owned and operated by one person and the simplest form of business to enter, control and leave.
Advantages pg 138 Disadvantages pg 139
(A)Ease of startup (D)Limited liability
(A)Pride of ownership (D)Lack of continuity
(A)Retention of all profits for the sole proprietor (D)Lack of money (A)Flexibility (D)Limited management skills
(A)Tax advantages (D)Difficulty in hiring employees
RQ 5-2. How does a partnership differ from a sole proprietorship? What disadvantage of a sole proprietorship does the partnership tend to eliminate or reduce?
Pg 140 Partnership = 2 or more persons act as co-owner of the business for profit. Sole Proprietorship = Has only one owner because partners can pool their funds, a partnership usually has more capital available than does a s/p. A partnership also tends to limit the disadvantage of limited business skills and knowledge because a partner can add skills and knowledge.
RQ 5-3. What is the difference between a general partner and a limited partner?
Pg 140 A general partner is responsible for running the business and for all business debts. A limited partner has no management reasonability and is not responsible for business debts beyond the amount he or she has invested already.
RQ 5-4. What issues should be included in a partnership agreement? Why?
Pg 142 Figure 5.3
1. Names of partners
2. Nature, name and address of business
3. Duration of partnership
4. Contribution of capital
5. Duties of each partner
6. Salaries, withdrawals and distributions of profits
7. Termination
8. Signatures
9. Date
RQ 5-7. What rights do stockholders have?
Pg 147
1. Share in profits through payments of dividends
2. Attend annual stock holders meeting
3. Vote at annual stock holders meeting
4. Receive information about the company
RQ 5-9. What are the major advantages and disadvantages associated with the corporate form of business ownership?
Advantage pg 149-150 Disadvantage pg 150-151 (A)Limited liability (D)Difficult and Expensive to start up (A)Base of raising capital (D)Government regulations (A)Ease of transfer of ownership (D)Double taxation (A)Perpetual life (D)Lack of secrecy (A)Specialized management