Business Ethics Lesson 1: Forms of Business Organization Quiz

Roles of Business

• Businesses provide goods and services to meet people's needs and wants.
• They create employment opportunities, making life more comfortable and improving standard of living conditions.
• Businesses also provide taxes to the government.

Fairness and Integrity in Business

• Fairness refers to treating people with a standard of performance that is consistent and equal based on commitments.
• Integrity is doing the right thing even when no one else is around, demonstrating personal quality of fairness.
• Examples of fairness and integrity in business include:
  • Providing equal opportunities for all employees regardless of background or identity.
  • Ensuring fair and competitive pricing for products or services offered to customers.
  • Implementing unbiased hiring and promotion practices based on merit and qualifications.
  • Resolving conflicts and disputes among employees or stakeholders in a fair and impartial manner.

Features of Business Policy

• Specific: Policy should be specific and definite to avoid uncertainty and difficulty in implementation.
• Clear: Policy must be unambiguous, avoiding use of jargons and connotations to prevent misunderstandings.
• Reliable/Uniform: Policy must be uniform enough to be efficiently followed by subordinates.
• Appropriate: Policy should be appropriate to the present organizational goal.
• Simple: A policy should be simple and easily understood by all in the organization.
• Inclusive/Comprehensive: Policy must be comprehensive to have a wide scope.
• Flexible: Policy should be flexible in operation/application.
• Stable: Policy should be stable to avoid indecisiveness and uncertainty.

Bookkeeping and Accounting

• Bookkeeping is the recording of financial transactions, part of the process of accounting in business.
• Transactions include purchases, sales, receipts, and payments by an individual person or an organization/corporation.

Reportorial Requirements and Documentation

• Companies that sell securities to the public, are listed in the stock exchange, or are classified as public companies have stricter reportorial requirements.
• Every company registered with the Securities and Exchange Commission (SEC) has certain obligations to fulfill.

Business Organization and Ethics

• A business organization is an entity aimed at carrying on commercial enterprise by providing goods or services to meet the needs of customers.
• Forms of business organization include:
  • Sole Proprietorship
  • Partnership
  • Corporation
  • Co-operative

Sole Proprietorship

• Advantages:
  • Easy and inexpensive to register
  • Regulatory burden is generally light
  • Direct control of decision making
  • Minimal working capital required for start-up
  • Some tax advantages if the business is not doing well
  • All profits go to the owner directly
• Disadvantages:
  • Unlimited Liability
  • Income is taxable at the personal rate and, if the business is profitable, this could put the owner in a higher tax bracket
  • Lack of continuity for the business if the owner is unavailable
  • Can be difficult to raise capital on their own