pob flashcrards

barter

The exchange of goods and services for other goods and services without the use of money

Money(Definition)

Anything that is generally acceptable as a medium of exchange and a mean on settling debts

Functions of money

Medium of exchange, standard of deferred payments, unit of account, store of value

Characteristics of money

Durability, portability, divisibility, limited in supply

Instruments of exchange

Cash, cheques, bank drafts, credit cards,debit cards, bills of exchange, promissory notes, cryptocurrencies

bounce check

When the account attached has insufficient funds

Money order

A secure prepaid financial instrument used to transfer specific amount of money to someone else. It functions similarly to a check but is more secure since it is prepaid

Advantages of a sole trader

Keeps all profit, easy to form, decisions are made easily since no one is needed to consult

Disadvantages of a sole trader

Long working hours, capital is limited, heavy work load

What is a partnership

A legal arrangement that allows two or more people to share responsibility for a business.( 2-20 people) at least 1 person as unlimited liability

Advantages of a partnership

Less financial burden, less paperwork, additional knowledge, shared responsibility

Disadvantages of a partnership

Disagreement, cant make your own decisions, capital is limited

What is a certificate of incorporation

An official document that proves a business is legally registered as a corporation

What is a silent/sleeping partner?

Someone who contributes money but has nothing to do with the running of the business

Limited liability

You stand to lose what you invested if the business fails

Unlimited liability

You stand to lose more than what you invested in the business

What is a cooporative?

A type of business formed by a group of people who have a common interest and the profits are shared among members in other words the members are the owners (credit unions are the most common cooperatives in slu)

Private limited companies(LTD)

Up to 50 people. A type of business structure where the company is privately owned. The ownership is divided into shares, but the shares are not sold to the public. The liability is limited

Advantages of private limited companies

Limited liability, separate legal entity, control of ownership, perpetual succession, tax efficiency, raising capital,

Disadvantages of private limited companies

Complex setup, restricted share trading, public disclosure, ongoing compliance, profit sharing,

What is a share?

A share is a small part of a company that you can own

What is a franchise

A business where one person the franchisee) is allowed to open and run a branch of an existing, successful business (the franchiser)the franchisee pays fees to use the brand name, products, and systems of the franchisor