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Questions and Answers
How do corporations raise money and resources to expand? (Check all that apply)
How do corporations raise money and resources to expand? (Check all that apply)
- They agree to sell stocks. (correct)
- They save business profits.
- They issue bonds. (correct)
- They request a bank loan. (correct)
- They cash in dividends.
A disadvantage of forming a partnership is that owners:
A disadvantage of forming a partnership is that owners:
- Can find it tougher to start and stop a business.
- Can find it more difficult to get a bank loan.
- Are only responsible for their own finances.
- Are fully responsible for their partners' losses. (correct)
Which are examples of sole proprietorships? (Check all that apply)
Which are examples of sole proprietorships? (Check all that apply)
- Independent workers (correct)
- Franchise restaurants in a partnership
- Freelance writers (correct)
- Doctors in a partnership
- Lawyers working for a corporation
- Tax preparer working his own business (correct)
Which can be considered disadvantages of sole proprietorships and partnerships?
Which can be considered disadvantages of sole proprietorships and partnerships?
The most common business organizations in the United States are:
The most common business organizations in the United States are:
Entrepreneurs who want to open a franchise:
Entrepreneurs who want to open a franchise:
Which best describes the difference between preferred and common stocks?
Which best describes the difference between preferred and common stocks?
People who buy stock in a company are known as?
People who buy stock in a company are known as?
Franchises are attractive to business owners because:
Franchises are attractive to business owners because:
Which document determines the number of shares a company can sell?
Which document determines the number of shares a company can sell?
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Study Notes
Corporations and Fundraising
- Corporations raise funds through bank loans, retained profits, stock sales, and bond issuance.
Partnerships
- Owners in a partnership are fully responsible for their partners' losses, presenting a significant risk.
Sole Proprietorships
- Examples include independent workers, tax preparers with their own business, and freelance writers.
Disadvantages of Business Structures
- Sole proprietorships require one individual to handle diverse responsibilities, while partnerships task multiple individuals with decision-making.
Common Business Organizations
- In the U.S., sole proprietorships rank as the most common form of business organization.
Franchises
- Franchise entrepreneurs purchase rights from the parent company and must invest in an approved location.
Stock Types
- Common stockholders have voting rights per share, whereas preferred stockholders receive dividend priority but lack voting rights.
Shareholders
- Individuals who buy stock in a company are referred to as shareholders.
Attractiveness of Franchises
- Franchises lure business owners due to established business models and reduced risk factors.
Corporate Documents
- A corporate charter outlines the maximum number of shares a company can issue.
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