1. Today – Wednesday 5/08/19 – Economics 1. Quick review of some Ch
Today – Wednesday 5/08/19 – Economics 1. Quick review of some Ch. 8 Vocabulary. 2. Chapter 8 Vocabulary Quiz 3. Tomorrow we will go to the computer lab to work on EVERFI.

2. Review of Ch. 8 Vocabulary that needs reviewing

3. Sole Proprietorship
Business owned and operated by a single individual.
*They make up only about 4% of sales, but earn about 10% of all profits.

4. Limited Life
This is another disadvantage of a Sole Proprietorship. This means that the firm legally ceases to exist when the owner dies, quits, or sells the business.

5. Unlimited Liability
If anything happens, it’s your fault. You bear all the responsibilities of losses and debts. This is a disadvantage of a sole proprietorship.

6. Partnership
A business owned by two or more people that is not a corporation.

7. General Partnership
This is the most common. In this case, all partners are responsible for operations, management, and finances of the business.

8. Limited Partnership
At least one partner is not active in the daily running and responsibilities of the partnership. May not be obligated to the debts either.

9. Corporations
A form of business organization recognized by law as a separate legal entity, with all the rights of an individual.

10. Common stock
With this type of stock, each stockholder receives a vote for each share of stock owned. These shareholders can elect members of the board of directors, who determine company policies, and hire management.

11. Preferred Stock
Owners of this type of stock are nonvoting shareholders. These shareholders do not get a say in company leadership or policy. However, they receive dividends first, and will receive their investment back first if the company goes out of business.

12. Bonds
A written promise to pay borrowed money back at a later date, with interest.

13. Principal
This is the part of a bond that represents the initial amount borrowed by the company, government, school district, etc.

14. Interest
The is the part of a bond the borrower will pay back, on top of the principal amount. The higher the interest, the more valuable the bond.

15. Franchise
A temporary business investment that involves renting or leasing another business firm’s successful business model. This is the definition of this type of organization.

16. Franchisor
The is the actual owner of the business name, model, and concept, etc. The Franchisor basically rents the rights to run a business to the Franchisee. McDonald’s Corporation owns the Franchise, but as Franchisor rents the business to an individual owner/operator of a store or Franchisee.

17. Franchisee
This is the investor who rents or leases the business name and model.

18. Net Income
Tracking the flow of money through a business is the key to understanding it’s health. Once you understand it’s debts, and expenses, you can tally its ________________. (income after taxes and expenses).

19. Cash flow
This is the sum of net income and noncash charges such as depreciation. It is a more comprehensive measure of a firm’s profits. The more cash that is freed up in a business, the more that cash can be re-invested in that business to allow for growth.

20. Horizontal Merger
Firms that produce the same good or service join together.
Ex: JP Morgan joining Chase Manhattan to for JP Morgan Chase.

21. Vertical Merger
Firms that perform different stages of the business (manufacturing, advertising, marketing, sales, research and development, etc.) joining together.

23. Nonprofit Organizations
An organization that works in a business like way to promote the collective interests of its members, rather than seek financial gains for its owners.

24. Cooperative, or co-op
A common type of nonprofit organization is a______________________ These are voluntary organizations that are formed to carry on some sort of economic activity that will benefit its members. For example: A credit union, farmer’s co-op,
artist co-ops, fishing co-ops, etc.