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RSM100 Lecture Notes.
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RSM100 Lecture Notes.
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RSM100 Lecture NotesA and D of corporations? - ANS-Advantages:
- when the company goes bankrupt, it cannot go after anything other than what you
invested in it
- more capital as people are more likely to invest in a corporation
-you can defer taxes
-easier to operate internationally
-perpetual life
-easier to change ownership
Disadvantages:
- double taxation: personal level and business level
- decision making is slower
- legal costs
-more paperwork to continue and dissolve the corporation
-more complex accounting
A and D of a sole proprietorship - ANS-Advantages:
- single owner so it is easy to form and dissolve
- gives the owner the most management fleixbility
- owner has the right to profits after paying all business-related bills and taxes
disadvantge:
- the owners personal financial liability for the business's debt
- the business can only operate with resources limited to the owners funds and money
- financial limitations can keep the business from expanding
- owner must handle a wide rnage of management and operational tasks (they may not
have skills in every area) which can cause the firm to not grow and even damage
- higher chance of being audited by the Canada Revwnue Agency because they do not
have a third party to look at their reports.
- lacks long-term continuity as personal circumstances can terminate the business.
A and D of partnerships - ANS-Advantages:
- allows for greater financial capability
- nice when someone or each individuals have a particular skills that benefit the
business
Disadvantages:
- exposed to unlimited financial liability, bares full responsibility for the actions of the
other partner
, - if one partner defaults, it is the responsbility of all the partners. Therefore there are
limited liability partnerships which only limie the liabilities of a partner to the value of
their interests in the company.
- if a partner wants to the leave the firm they have to find a new partner to buy their
interest in the firm
A and D of not-for-profit businesses - ANS-a:
- do not issue shares because they do not pay dividends to owners and their owernship
rarely changes
- exempt from paying income taxes
d:
- must meet strict deadlines to keep their nont-for-profit status
what is wealth creation - ANS-combination of inputs, supportive envrionment, means of
production, somoene who will pay more than the cost
A and D of franchises? - ANS-A:
- prior performance record
- recognizable company name/brand
-proven business model
-tested managment program
-savings through volume purchases
D:
- initial franchise fees
-future payments
- linked to reputation and management
- franchise agreement restrictions
- tight control
financing for small businesses - ANS-seed capital: the money needed to start the
business
debt financing: bank loans, friends and family, finance companies, credit cards
equity financing: angel investors, venture capitalists
why do small businesses fail? - ANS-lack of financial support, lack of management
experience, government regualtions
why do people become entrepreneurs? - ANS-to be their own boss, to have job security,
to have financial success, to obtain a better quality of life
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