Business Ownership and Partnership Agreements
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Questions and Answers

What was Procter's suggestion to his brothers-in-law?

  • To form a corporation (correct)
  • To close their businesses
  • To dissolve their businesses
  • To expand their businesses individually

    • Which of the following is NOT a characteristic of a small business?

  • Dominant in its field (correct)
  • Independently owned and operated
  • Operated for profit
  • Not dominant in its field

    • What is the primary way corporations grow?

  • Through mergers and acquisitions
  • Through franchising
  • Through internal expansion (correct)
  • Through hostile takeovers

    • What is a tender offer in the context of mergers and acquisitions?

    <p>An offer to purchase stock at a premium price</p> Signup and view all the answers

    What is an advantage of small businesses?

    <p>All of the above</p> Signup and view all the answers

    What is a hostile takeover in the context of mergers and acquisitions?

    <p>A situation in which the management and board of directors disapprove of the merger</p> Signup and view all the answers

    What is a characteristic of distribution industries?

    <p>They concern with the movement of goods from producers to consumers</p> Signup and view all the answers

    What is a benefit of corporate ownership structures?

    <p>They provide limited liability</p> Signup and view all the answers

    What is a strategy for corporate growth?

    <p>Growth through expansion of present operations</p> Signup and view all the answers

    What is a role of small businesses in the economy?

    <p>They fill the needs of society and other businesses</p> Signup and view all the answers

    Study Notes

    Partnership Agreements

    • A partnership agreement outlines the terms of the partnership, including decision-making processes, duties, investments, profit/loss distribution, and dissolution procedures.
    • It is common to have a third-party witness involved in the agreement.

    Forms of Business Ownership

    • A corporation is a legal entity separate from its owners, with rights and responsibilities similar to individuals.
    • Corporations can enter contracts, borrow/loan money, sue/be sued, hire employees, own assets, and pay taxes.

    Corporation Ownership

    • The ownership of a corporation is represented by shares of stock, and those who own the shares are called stockholders or shareholders.
    • There are two types of corporate ownership: closed corporations (stock is owned by a few people and not publicly traded) and open corporations (stock is publicly traded).

    Stockholder Rights

    • Common stockholders have voting rights, but their claims on profits/dividends are subordinate to those of preferred stockholders.
    • Common stockholders can vote by proxy, allowing them to transfer their voting rights to others.
    • Preferred stockholders usually do not have voting rights, but their claims on dividends are paid before those of common stockholders.

    Corporate Structure

    • The board of directors is the top governing body of a corporation, responsible for setting corporate goals and strategies.
    • Corporate officers, appointed by the board of directors, are responsible for implementing strategies and directing the corporation.

    Advantages and Disadvantages of Corporations

    • Advantages: limited liability, ease of raising capital, ease of transferring ownership, perpetual life, and specialized management.
    • Disadvantages: difficulty of formation, government regulation, conflict with the corporation, double taxation, and lack of secrecy.

    Comparison of Business Ownership Forms

    • Sole proprietorships, general partnerships, and corporations differ in their protection against liability, ease of raising money, ownership transfer, and government regulations.

    Corporate Growth

    • Larger firms generally have greater sales revenue and profit, facilitating growth.
    • Two strategies for corporate growth are growth from within (expanding present operations) and growth through mergers and acquisitions.

    Small Businesses

    • A small business is an independently owned and operated business for profit, not dominant in its field.
    • Small businesses are important for providing technological innovation, employment, competition, and fulfilling societal needs.

    The Importance of Small Businesses

    • Small businesses produce more innovations relative to the number of employees compared to large firms.
    • They provide employment, competition, and fill needs that others cannot.

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    Description

    Learn about the different forms of business ownership, including partnerships and corporations, and understand the importance of partnership agreements.

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