Econ: Business Structures Flashcards
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Questions and Answers

What must entrepreneurs do to open a franchise?

  • Buy the rights from the parent company and invest in a location approved by the parent company (correct)
  • Invest in any location they choose
  • Start the business from scratch
  • Borrow money from friends
  • What are disadvantages of sole proprietorships and partnerships?

    Sole proprietorships require one person to do many things, while partnerships require many people to weigh in on decisions.

    What is the process of how a business incorporates?

    The business must gain government permission and issue a stock sale, followed by a shareholder vote.

    How do cooperatives save members money?

    <p>By purchasing supplies and services as a group.</p> Signup and view all the answers

    What must an entrepreneur who opens a franchise assume?

    <p>Debts.</p> Signup and view all the answers

    Which are examples of sole proprietorships? (Select all that apply)

    <p>Independent workers</p> Signup and view all the answers

    What is a disadvantage of corporations regarding profits?

    <p>Shareholders have to pay taxes on profits.</p> Signup and view all the answers

    What happens to earnings in a cooperative?

    <p>They are shared with member owners.</p> Signup and view all the answers

    What is a disadvantage of forming a partnership?

    <p>Owners are fully responsible for their partners' losses.</p> Signup and view all the answers

    How do corporations raise money and resources to expand? (Select all that apply)

    <p>Agree to sell stocks</p> Signup and view all the answers

    Study Notes

    Business Structures Overview

    • Entrepreneurs seeking to open a franchise must buy rights from the parent company and invest in an approved location.
    • Sole proprietorships require a single individual to manage all aspects, while partnerships involve collective decision-making from multiple partners.
    • Incorporating a business involves obtaining government permission, issuing a stock sale, and conducting a shareholder vote.

    Types of Business Entities

    • Cooperatives benefit members by collectively purchasing supplies and services, leading to cost savings.
    • Sole proprietorships can include independent workers, tax preparers, and freelance writers, representing business structures owned by one person.
    • Corporations face the disadvantage of shareholders being liable for taxes on profits, which can affect overall earnings.

    Financial Implications

    • In cooperatives, profits are distributed among member owners, fostering a sense of shared investment.
    • A key disadvantage of partnerships is that owners are fully liable for any losses incurred by their partners.
    • Corporations can fund expansion by acquiring bank loans, selling stocks, and issuing bonds, which allows for growth and resource acquisition.

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    Description

    Test your knowledge on various business structures with these flashcards. From franchises to sole proprietorships, this quiz covers essential definitions and concepts related to the formation and management of businesses. Perfect for entrepreneurs and business students alike!

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