Business Ethics Lesson 1: Forms of Business Organization Quiz

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Questions and Answers

What do businesses obtain from people to use for production?

Capital investment

Tax incentives

Operational policies

Labor force, equipment, and materials (correct)

What does fairness in business refer to?

Increasing product pricing unfairly

Minimizing customer satisfaction

Ignoring commitments to customers

Providing equal opportunities for all employees (correct)

How is integrity defined in the context of business?

Doing the right thing even when no one else is around (correct)

Disregarding employee qualifications in promotions

Ensuring competitive pricing for products

Implementing biased hiring practices

What is the primary purpose of a business according to the text?

Providing goods and services to meet needs and wants Signup and view all the answers

Which of the following is NOT an example of integrity in business practices?

Providing preferential treatment based on identity Signup and view all the answers

What does fairness entail in the business context?

"Treating people with a standard of performance that is consistent and equal" Signup and view all the answers

What is a key characteristic of a reliable/uniform business policy?

It must be uniform for efficient implementation. Signup and view all the answers

Which of the following is NOT a feature of an effective business policy?

Indecisiveness and uncertainty Signup and view all the answers

What does the term 'bookkeeping' refer to in the context of business?

Recording financial transactions Signup and view all the answers

Why do companies selling securities to the public have stricter reportorial requirements?

To fulfill obligations related to public investment Signup and view all the answers

How does a stable policy contribute to effective business management?

By enabling clear guidance for the organization Signup and view all the answers

Why is it essential for a business policy to be specific/definite?

To ensure easy implementation and understanding Signup and view all the answers

What is the main purpose of a business organization according to the text?

To provide goods or services to customers Signup and view all the answers

Which of the following is a key advantage of a sole proprietorship mentioned in the text?

Minimal working capital required for start-up Signup and view all the answers

What is the primary disadvantage of a sole proprietorship according to the text?

Difficulty in raising capital Signup and view all the answers

Why is it important to have a partnership agreement when establishing a partnership?

To avoid disputes between partners later on Signup and view all the answers

What type of liability do partners in a general partnership have according to the text?

Joint liability Signup and view all the answers

Which of the following is NOT mentioned as a disadvantage of a sole proprietorship in the text?

Lack of continuity if owner is unavailable Signup and view all the answers

Study Notes

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

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Description

Test your knowledge on different forms of business organization including sole proprietorship, partnership, corporation, and cooperative. Explore the characteristics and responsibilities associated with each type of business structure.