| A | B |
|---|
| Sole proprietorship | business owned and run by a single person who has rights to all profits and unlimited liability for all debts of the firm |
| unlimited libility | owner is personally and fully responsible for all losses and debts of the business…..if business fails owner may lose Personal possessions to satisfy debts |
| inventory | stock of finished goods and parts held in reserve |
| fringe benefits | employee benefits like paid vacations, sick leave, retirement, health & medical |
| partnership | business jointly owned by 2 or more people who share The profits and the responsibilities for the business |
| General partnership | ALL partners are responsible for management and financial obligations of a business |
| Limited partnership | at least one partner is NOT ACTIVE in the daily running of the business (The LIMITED partner has LIMITED responsibility for debts and obligations of the Business |
| Articles of partnership | specify arrangement between partners formal, legal paper state ahead of time how expected profits or (LOSSES) will be divided |
| limited partnership | partner’s responsilbility for DEBTs of Business is LIMITED by SIZE of his investment in it |
| limited life | - (partner dies or leaves, Partnership must be dissolved and reorganized |
| corporation | of business organization recognized by law as a Separate legal entity- a very formal legal relationship- |
| charter | a gov’t document giving permission to incorporate |
| stock | ownership certificates in the firm |
| stockholders or shareholders | investors; people who own a share or shares of stock in a corporation |
| dividend | a check that Transfers a portion of corporation profits to shareholders |
| common stock | ONE VOTE PER share of stock |
| preferred stock | non-voting ; NO right to elect board of directors….BUT 1st to get dividends and 1st to get investment back if corporation goes out of business |
| bonds | written promise to repay amount at later date) |
| principal | amount borrowed |
| interest | price paid for use of another’s money |
| limited liability | the corp, NOT its owners, is responsible for its obligations (stockholders are responsible to the money they invested |
| unlimited life | corporation continues to exist even when ownership changes |
| double taxation | taxation of dividends BOTH as corporate profit and as personal income |
| SEC | federal (Securities and Exchange Commission) |
