Economic Perspectives

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dividend: check paid to stockholders quarterly , representing a portion of corporate profits.

common stock: most basic form of corporate ownership, with one vote per share for stockholders.

preferred stock: form of stock with no voting privileges; has a higher claim on corporate income and assets than does common stock.

bond: formal contract to repay borrowed money and interest on the borrowed money at regular future intervals.

principal: amount borrowed when getting a loan or issuing a bond.

interest: payment made on the use of borrowed money usually paid at periodic intervals for long-term bonds or loans.

double taxation: feature of taxation that allows stockholders dividends to be taxed both as corporate profit and as personal income.

Economic Perspectives

partnership: unincorporated business owned and operated by two or more people who share the profits and have unlimited liability for the debts and obligations of the firm.

general partnership form of partnership where all partners are jointly responsible for management and debts.

limited partnership: form of partnership where one or more partners are not active in the daily business, and whose liability for the partnership's debt is restricted to the amount invested in the business.

corporation: form of business organization recognized by law as as separate legal entity with all the rights and responsibilities of an individual, including the right to buy and sell property, enter into legal contracts, and to sue and be sued.

charter: written government approval to establish a corporation; includes company name, address, purpose of business, number of shares of stock, and other features of the business.

stock: certificate of ownership in a corporation; common or preferred stock.

ranchisee

franchise: business investment that involves renting or leasing another successful business model.

franchisor: creator of the business model that is rented or leased by investors.

franchisee: person that invests in the business model of the franchisor with his or her own money and start-up costs.

Economic Perspectives

sole proprietorship: unincorporated business owned and run by a single person who has rights to all profits and unlimited liability for all debts of the firm; most common form of business organization in the United States.

comprise: to be composed of

entity: unit or being

Unlimited liability: requirement that an owner is personally and fully responsible for all losses and debts of a business; applies to proprietorships, and general partnerships.

inventory: stock of goods held in reserve: includes finished goods (waiting to be sold ), and raw materials to be used in production.

limited life: situation in which a firm legally ceases to exist when an owner dies or quits, or new owner is added; applies to sole proprietorships and partnerships.