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15 Terms
1
What are the three main forms of business ownership?
Sole trader (sole proprietorship), Partnership, Corporation.
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2
What is a sole proprietorship?
A business owned by a single person.
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3
List two advantages of a sole proprietorship.
Simplicity and single layer of taxation.
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4
What are the disadvantages of a sole proprietorship?
Unlimited personal liability, demands on the owner, limited managerial perspective.
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5
What is the key difference between a general partnership and a limited partnership?
In a general partnership, all partners have unlimited liability; in a limited partnership, limited partners have liability only up to their investment.
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6
List two advantages of partnerships.
Simplicity and shared resources.
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7
What is the meaning of corporate governance?
The policies, procedures, relationships, and systems to oversee the operation of a corporation.
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8
What are the advantages of corporations?
Ability to raise capital and limited liability for shareholders.
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9
What is a merger?
An action taken by two companies to combine and perform as a single entity.
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10
What is the difference between a strategic alliance and a joint venture?
A strategic alliance is a long-term partnership, while a joint venture is a separate legal entity established by two or more companies.
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11
What are the potential risks associated with mergers and acquisitions?
Financing difficulties, managerial conflicts, and challenges in integrating corporate cultures.
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12
What is the primary purpose of a partnership agreement?
To outline investment percentages, profit-sharing, management responsibilities, and dispute-resolution procedures.
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13
What differentiates private corporations from public corporations?
Private corporations have a maximum of 50 shareholders and are not available for public purchase, whereas public corporations sell shares to anyone.
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14
What is a hostile takeover?
Acquisition of another company against the wishes of its management.
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15
What does 'liquidity' refer to in the context of corporations?
The ease and speed of converting shares into cash.
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