WGU D432 (Section 1)
1.
2. Difference be- value-based ethical behavior is implementing a policy that
tween Value provides accommodations for employees volunteering at
Based and Regu- a local nonprofit. An example of regulatory ethical be-
latory ethical be- havior is implementing a policy that protects sensitive
havior customer data.
3. Describe the dis- 1. Unlimited liability (business owner becomes responsi-
advantages of ble for all debt company incurs)
sole proprietor- 2. Difficulty raising capital. Business assets are unpro-
ships tected against claims of personal creditors, so business
lenders view so proprietorships as high risk due to the
owners unlimited liability.
3. Limited managerial expertise.
4. Trouble finding qualified employees due to lack of ben-
efits, growth and pay compared to larger corps
5. Personal time commitment.
6. Losses are the owners responsibility.
7. Unstable business life.
4. List the advan- 1. Easy and inexpensive to form
tages of sole pro- 2. Few legal requirements
prietorships 3.Profits all go to the owner
4. Direct control of business - all business decisions are
made by the sole proprietorship owner without having to
consult anyone
5. What are some Includes name of partnership, duties of each partner,
important el- compensation structure, outlines duties and responsibili-
ements of ties, provisions, for the addition of new partners, the sale
the partnership of partnership interest, and procedures for resolving con-
agreement? flicts, dissolving the business, and distributing the assets
6. List the advan- 1. ease of formation, partnerships are easy to form.
tages of partner- 2. Availability of capital
ships 3. Flexibility.
4. Diversity of skills and expertise.
, WGU D432 (Section 1)
5. Relative freedom from government control.
6. No special taxes (partnerships pay no income taxes)
7. Describe the dis- 1. Unlimited liability - all general partners have unlimited
advantages of liability for the deaths of the business.
partnerships 2. Potential for conflict between partners.
3. Difficulty exiting or dissolving partnership.
4. Complexity of profit sharing.
8. What is a Gener- All partners share in the management and profits they
al Partnership co-the assets, and can each act on behalf of the firm.
Each partner has unlimited liability for all the business
obligations.
9. What is a limited Has two or more partners - one or more general partners
partnership? who have unlimited liability and one or more limited part-
ners whose liability is limited to the amount they invested
10. What is a limit- Similar to general partnership, except the partners are not
ed liability part- held responsible for business debt, and liabilities
nership or LLP?
11. What character- Legal entity, subject to the laws of states in which it is
istics are associ- formed, were the right to operate as a business is issued
ated with a cor- by state charter. Corporations can own property, enter
poration? into contracts, Sue, and be sued and engage in business
operations under the terms of of each charter, they are
taxable entities and owners are not personally liable for
its debt.
12. List the five main 1. Select the companies
steps for incor- 2. Writing articles of incorporation and filing them with the
poration appropriate state office, usually the secretary of state.
3. Pay required fees and taxes.
4. Hold an organizational meeting
5. Adopt bylaws, elect directors, and pass the first oper-
ating resolutions.
13. List the articles 1. Name of corporation.
of incorporation 2. List of companies goals.
, WGU D432 (Section 1)
components that 3. Types of stock and number of shares of each type to
are consistent issue.
among all states 4. Life of the corporation.
5. Minimum investments by owners.
6. Methods for transferring shares of stock.
7. Address of the corporate office.
8. Name and addresses of the first board of directors.
14. What are the Stockholders - (or shareholders) are the owners of a cor-
three compo- poration, holding shares of stock that provide them with
nents of a corpo- certain rights. They may receive a portion of the corpora-
rations organiza- tion's profits in the form of dividends, and they can sell or
tional structure? transfer their ownership in the corporation (represented
by their shares of stock) at any time. Stockholders can
attend annual meetings, elect the board of directors, and
vote on matters that affect the corporation in accordance
with its charter and bylaws. Each share of stock generally
carries one vote.
directors - The stockholders elect a board of directors
to govern and handle the overall management of the
corporation. The directors set major corporate goals and
policies, hire corporate officers, and oversee the firm's
operations and finances. Small firms may have as few as
3 directors, whereas large corporations usually have 10
to 15.
The boards of large corporations typically include both
corporate executives and outside directors (not employed
by the organization) chosen
officers - top management and include the president and
chief executive officer (CEO), vice presidents, treasurer,
and secretary, who are responsible for achieving cor-
porate goals and policies. Officers may also be board
members and stockholders.
15. Describe advan- Limited liability - limited to the amount of stock owned
tages associat- ease of transferring ownership - Stockholders of public
ed with corpora- corporations can sell their shares at any time without
tions as a busi- affecting the status of the corporation.
ness form unlimited life
, WGU D432 (Section 1)
tax deductions - Corporations are allowed certain tax
deductions, such as operating expenses, which reduces
their taxable income.
ability to attract financing - Corporations can raise money
by selling new shares of stock. Dividing ownership into
smaller units makes it affordable to more investors, who
can purchase one or several thousand shares. The large
size and stability of corporations also helps them get bank
financing.
16. Describe the dis- Double taxation of profits - Corporations must pay federal
advantages of and state income taxes on their profits. In addition, any
corporations profits (dividends) paid to stockholders are taxed as per-
sonal income, although at a somewhat reduced rate.
Cost and complexity of formation - corporation involves
several steps, and costs can run into thousands of dollars,
including state filing, registration, and license fees, as well
as the cost of attorneys and accountants.
more government restrictions - Unlike sole proprietor-
ships and partnerships, corporations are subject to many
regulations and reporting requirements. For example,
corporations must register in each state where they do
business and must also register with the Securities and
Exchange Commission (SEC) before selling stock to the
public.
17. What are the 1. C Corporation (basic form of corporation)
three types of 2. S corporation (hybrid entity allowing smaller corpora-
corporations? tions to avoid double taxation of corporate profits as long
as they meet certain size and ownership requirements)
3. LLC (limited liability company - also hybrid, very similar
to S corporation. They appeal to small businesses be-
cause they are easy to set up and not subject to many
restrictions)
18. What is the main is a legal entity with several corporate features, such as
objective of a co- limited liability, an unlimited life span, an elected board
operative? of directors, and an administrative staff. Cooperatives are
organized solely to meet the needs of the member-own-
1.
2. Difference be- value-based ethical behavior is implementing a policy that
tween Value provides accommodations for employees volunteering at
Based and Regu- a local nonprofit. An example of regulatory ethical be-
latory ethical be- havior is implementing a policy that protects sensitive
havior customer data.
3. Describe the dis- 1. Unlimited liability (business owner becomes responsi-
advantages of ble for all debt company incurs)
sole proprietor- 2. Difficulty raising capital. Business assets are unpro-
ships tected against claims of personal creditors, so business
lenders view so proprietorships as high risk due to the
owners unlimited liability.
3. Limited managerial expertise.
4. Trouble finding qualified employees due to lack of ben-
efits, growth and pay compared to larger corps
5. Personal time commitment.
6. Losses are the owners responsibility.
7. Unstable business life.
4. List the advan- 1. Easy and inexpensive to form
tages of sole pro- 2. Few legal requirements
prietorships 3.Profits all go to the owner
4. Direct control of business - all business decisions are
made by the sole proprietorship owner without having to
consult anyone
5. What are some Includes name of partnership, duties of each partner,
important el- compensation structure, outlines duties and responsibili-
ements of ties, provisions, for the addition of new partners, the sale
the partnership of partnership interest, and procedures for resolving con-
agreement? flicts, dissolving the business, and distributing the assets
6. List the advan- 1. ease of formation, partnerships are easy to form.
tages of partner- 2. Availability of capital
ships 3. Flexibility.
4. Diversity of skills and expertise.
, WGU D432 (Section 1)
5. Relative freedom from government control.
6. No special taxes (partnerships pay no income taxes)
7. Describe the dis- 1. Unlimited liability - all general partners have unlimited
advantages of liability for the deaths of the business.
partnerships 2. Potential for conflict between partners.
3. Difficulty exiting or dissolving partnership.
4. Complexity of profit sharing.
8. What is a Gener- All partners share in the management and profits they
al Partnership co-the assets, and can each act on behalf of the firm.
Each partner has unlimited liability for all the business
obligations.
9. What is a limited Has two or more partners - one or more general partners
partnership? who have unlimited liability and one or more limited part-
ners whose liability is limited to the amount they invested
10. What is a limit- Similar to general partnership, except the partners are not
ed liability part- held responsible for business debt, and liabilities
nership or LLP?
11. What character- Legal entity, subject to the laws of states in which it is
istics are associ- formed, were the right to operate as a business is issued
ated with a cor- by state charter. Corporations can own property, enter
poration? into contracts, Sue, and be sued and engage in business
operations under the terms of of each charter, they are
taxable entities and owners are not personally liable for
its debt.
12. List the five main 1. Select the companies
steps for incor- 2. Writing articles of incorporation and filing them with the
poration appropriate state office, usually the secretary of state.
3. Pay required fees and taxes.
4. Hold an organizational meeting
5. Adopt bylaws, elect directors, and pass the first oper-
ating resolutions.
13. List the articles 1. Name of corporation.
of incorporation 2. List of companies goals.
, WGU D432 (Section 1)
components that 3. Types of stock and number of shares of each type to
are consistent issue.
among all states 4. Life of the corporation.
5. Minimum investments by owners.
6. Methods for transferring shares of stock.
7. Address of the corporate office.
8. Name and addresses of the first board of directors.
14. What are the Stockholders - (or shareholders) are the owners of a cor-
three compo- poration, holding shares of stock that provide them with
nents of a corpo- certain rights. They may receive a portion of the corpora-
rations organiza- tion's profits in the form of dividends, and they can sell or
tional structure? transfer their ownership in the corporation (represented
by their shares of stock) at any time. Stockholders can
attend annual meetings, elect the board of directors, and
vote on matters that affect the corporation in accordance
with its charter and bylaws. Each share of stock generally
carries one vote.
directors - The stockholders elect a board of directors
to govern and handle the overall management of the
corporation. The directors set major corporate goals and
policies, hire corporate officers, and oversee the firm's
operations and finances. Small firms may have as few as
3 directors, whereas large corporations usually have 10
to 15.
The boards of large corporations typically include both
corporate executives and outside directors (not employed
by the organization) chosen
officers - top management and include the president and
chief executive officer (CEO), vice presidents, treasurer,
and secretary, who are responsible for achieving cor-
porate goals and policies. Officers may also be board
members and stockholders.
15. Describe advan- Limited liability - limited to the amount of stock owned
tages associat- ease of transferring ownership - Stockholders of public
ed with corpora- corporations can sell their shares at any time without
tions as a busi- affecting the status of the corporation.
ness form unlimited life
, WGU D432 (Section 1)
tax deductions - Corporations are allowed certain tax
deductions, such as operating expenses, which reduces
their taxable income.
ability to attract financing - Corporations can raise money
by selling new shares of stock. Dividing ownership into
smaller units makes it affordable to more investors, who
can purchase one or several thousand shares. The large
size and stability of corporations also helps them get bank
financing.
16. Describe the dis- Double taxation of profits - Corporations must pay federal
advantages of and state income taxes on their profits. In addition, any
corporations profits (dividends) paid to stockholders are taxed as per-
sonal income, although at a somewhat reduced rate.
Cost and complexity of formation - corporation involves
several steps, and costs can run into thousands of dollars,
including state filing, registration, and license fees, as well
as the cost of attorneys and accountants.
more government restrictions - Unlike sole proprietor-
ships and partnerships, corporations are subject to many
regulations and reporting requirements. For example,
corporations must register in each state where they do
business and must also register with the Securities and
Exchange Commission (SEC) before selling stock to the
public.
17. What are the 1. C Corporation (basic form of corporation)
three types of 2. S corporation (hybrid entity allowing smaller corpora-
corporations? tions to avoid double taxation of corporate profits as long
as they meet certain size and ownership requirements)
3. LLC (limited liability company - also hybrid, very similar
to S corporation. They appeal to small businesses be-
cause they are easy to set up and not subject to many
restrictions)
18. What is the main is a legal entity with several corporate features, such as
objective of a co- limited liability, an unlimited life span, an elected board
operative? of directors, and an administrative staff. Cooperatives are
organized solely to meet the needs of the member-own-
