Business Chapter 4 Key Terms

Sole Proprietorship

A business that’s owned and operated by a single individual, who is responsible for all debts and obligations of the business.

Unlimited Liability

Business owner is personally responsible for all the debts and obligations of the business.

Partnership

A voluntary association of two or more persons

General Partner

A person who assumes full or shared responsibility for operating a business

Limited Partner

A person who invests money in a business but has no management responsibility

Corporation

Sometimes referred to as a regular or a C corporation. An artificial being, created by law, with most of the legal rights of a real person.

Stock

The shares of ownership in a corporation

Stockholder

A person who owns a corporations stock

Private Corporation

Sometimes referred to as a closed corporation. Stock is owned by few people and not available to the general public.

Public Corporation

A corporation whose stock can be bought and sold by anyone

Domestic Corporation

A corporation in the state in which it is incorporated

Foregin Corporation

A corporation in any state in which it does business except the one it is incorporated in. (Out of state)

Alien Corporation

A corporation chartered by a foreign government (Out of country)

Dividend

A distribution of earnings to the stockholders of a corporation

Common Stock

The most basic form of corporate ownership. Owners may vote on corporate policies

Preferred Stock

A form of corporate ownership that does not typically include voting rights but whose owners’ claims on dividends are paid before those of common stockholders.

Cumulative Preferred Stock

Preferred stock that pays dividends for the current year, as well as for any unpaid dividends are paid to common stockholders.

Noncumulative Preferred Stock

Preferred stock that solely pays dividends for the current year and does not pay dividends for previous years in which they were unpaid.

Proxy

A legal form listing issues to be decided at a stockholders meeting and enabling stockholders to transfer their voting rights to some other individual or individuals.

Board of Directors

The top governing body of a corporation, members of which are selected by stockholders.

Corporate Officers

Top executives within a corporation who are appointed by the board of directors.

Limited Liability

Limits each owners financial liability to the amount of money they have paid for the corporations stock.

S Corporation

A corporation that is taxed as though it were a partnership.

Limited Liability Company (LLC)

Combines the benefits of a corporation and a partnership while avoiding some of the restrictions and disadvantages of these forms of ownership.

Not for Profit Corporation (non-profit)

A corporation organized to provide a social, educational, religious, or other service rather to earn a profit.

Syndicate

A temporary association of individuals or firms organized to perform a specific task that requires a large amount of money.

Merger

The combining of two corporations or other business entities to form one business.

Hostile Takeover

A situation in which the management and the board of directors of a firm targeted for acquisition disapprove of the merger.