1. What are shareholders, and what is the difference between the preferred and common stock they buy? What type of business entity issues these types of stocks?
Shareholders buy stock in a corporation. Those who hold common stock can vote for the corporate board. Those who hold preferred stock have no vote. Corporations issue and sell stock.

2. How does liability differ in a general partnership and a limited partnership?
In a general partnership, liability is shared equally. In a limited partnership, some partners may have liability equal to their share of the business.

3. What is a sole proprietorship and what makes it the easiest form of business to start?
A sole proprietorship is a business owned and run by a single person who has rights to all profits and unlimited liability for all debts of the firm. This is the most common form of business organization in the United States. Sole proprietorship is the easiest form of business to start because it has the fewest requirements other than paying fees and obtaining licenses, if necessary.

4. How is responsibility shared in a partnership?
In a general partnership, all partners share responsibility equally.
In a limited partnership, one or more partners will share less of the responsibility.

5. Why do corporations generally have the largest profits of any form of business?
Corporations can often benefit from economies of scale (When more units of a good or a service can be produced on a larger scale, yet with (on average) less input costs) to gain market share.

6. Why is cash flow a more comprehensive measure of a company’s profits than net income?
Cash flow is the sum of net income and noncash charges such as depreciation; it represents the bottom line and is a more comprehensive measure of a firm’s profits. Cash flow represents the total amount of after-tax income generated from operations.

7. Why would business owners choose to reinvest profits?
Profits help fuel innovation, such as new product development, which can further cash flows. Also, investors look at cash flow before investing, and a solid cash flow attracts more investors.

8. What advantages are gained through business mergers?
Some advantages include, but are not limited to: faster growth, lower production costs, the acquisition of new product lines, the elimination of rivals, and the reinvention of corporate identity.

9. What are the different ways businesses can find start-up funds?
Businesses can find start-up funds by getting involved with an incubator (places where entrepreneurs can receive the training to build a successful start-up business), by finding venture capitalists (provide investment funds to a start-up business in exchange for partial ownership of the business) and angel investors (informal and usually affluent investors who provide start-up funds). They can also use social media to crowdfund (using social networking to appeal to potential investors).

10. How does the Better Business Bureau (BBB) benefit consumers
How does the Better Business Bureau (BBB) benefit consumers? How might complaints filed with the BBB affect a company’s relationship with its customers or potential customers?
The Better Business Bureau provides information on local companies to consumers so they know where to find goods and services, make inquiries, and make complaints. If a company’s BBB profile includes substantial complaints, current and potential customers may go elsewhere. However, negative complaints with the BBB may encourage a business to better serve its customers.

11. Why is the value of community organizations and cooperatives difficult to measure?
Many of the services they provide do not have a clear monetary value, and any revenue they make in excess of costs are put back into the organization.

12. How do some non-profit organizations promote the interests of workers and consumers?
These non-profit organizations provide a variety of services. For example, labor unions represent members in collective bargaining. Professional associations improve skill levels and public perceptions of the profession. Business associations sponsor educational programs and lobby for favorable business legislation.

13. How does the government operate as a non-profit organization?
The government operates as a non-profit by setting up agencies or businesses that provide services or products to the public. If a business brings in more money than it spends, the revenue goes back into the business.

14. What is a chamber of commerce and in what ways does the chamber of commerce benefit a community?
A chamber of commerce is an organization that promotes the welfare of its member businesses. The typical chamber sponsors activities ranging from educational programs to lobbying for favorable business legislation.

15. What is a labor union and what is collective bargaining?
A labor union is an organization that works for its members’ interests concerning pay, working hours, health coverage, fringe benefits, and other job related matters.
Collective bargaining is the process of negotiation between union and management representatives over pay, benefits, and job-related matters.

16. Identify and explain the three different types of cooperatives.
Consumer cooperatives: a voluntary association that buys bulk amounts of goods such as food or clothing that can then be sold to its members at prices lower than those charged by regular businesses. Members usually devote several hours a week or month to the operation in order to help keep costs down. Service cooperatives: provides services such as insurance, credit, or child care to its members, rather than goods. A credit union is an example of a service cooperative. Producer cooperatives: mostly made up of farmers and helps members promote or sell their products directly to central markets or to companies that use the members’ products. Ocean Spray is an example of a producer cooperative.