Midterm Review A review of the key concepts for the midterm

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Department
Accounting & Financial Management
Course
AFM 131
Professor
Robert Sproule
Semester
Winter

Description
Introduction to Business in N.A. – Midterm 1 Review CONCEPTS Chapter 4 – The Role of Government in Business 6 government activities that affect businesses: (pg. 102) 1. Crown corporations 2. Laws and regulations 3. Taxation and financial policies 4. Government Expenditures 5. Purchasing policies 6. Services Federal government responsibilities: (pg. 105-106)  Trade regulations (interprovincial and international)  Incorporation of federal companies  Taxation (both direct and indirect)  The banking and monetary system  National defence  Unemployment  Immigration  Criminal law  Fisheries Provincial government responsibilities: (pg. 107)  Regulation of provincial trade and commerce  Natural resources within their boundaries  Direct taxation for provincial purposes  Incorporation of provincial companies  Licensing for revenue purposes  The administration of justice  Health and social services  Municipal affairs  Property law  Education Municipal government responsibilities: pg. 108 Chapter 6 – Forms of Business Ownership Advantages of Sole Proprietors: (pg. 173) 1. Ease of starting and ending the business 2. Being your own boss 3. Pride of ownership 4. Leaving a legacy 5. Retention of company profit 6. No special taxes Disadvantages: (pg. 173-174) 1. Unlimited liability 2. Limited financial resources 3. Management difficulties 4. Overwhelming time commitment 5. Few fringe benefits 6. Limited growth 7. Limited lifespan Advantages of Partnerships: (pg. 175) 1. More financial resources 2. Shared management and pooled/complementary skills and knowledge 3. Longer survival 4. Shared risk 5. No special taxes Disadvantage: (pg. 176) 1. Unlimited liability 2. Division of profits 3. Disagreement among partners 4. Difficult to terminate Advantages of Corporations: (pg. 179-180) 1. Limited liability 2. More money for investment 3. Size 4. Perpetual life 5. Ease of ownership 6. Ease of drawing talented employees Disadvantages: (pg. 181-182) 1. Extensive paperwork 2. Double taxation 3. Two tax returns 4. Size 5. Difficulty of termination 6. Possible conflict with stockholders and board of directors 7. Initial cost For Comparison of Forms of Business Ownership refer to Figure 6.6 pg. 185 How Owners Affect Management: Employees  Managers  Officers  Board of Directors  Owners Advantages of Franchises: (pg. 190) 1. Management and marketing assistance 2. Personal ownership 3. Nationally recognized name 4. Financial advice and assistance 5. Lower failure rate Disadvantages: (pg. 191) 1. Large start-up costs 2. Shared profit 3. Management regulation 4. Coattile effects 5. Restrictions on selling 6. Fraudulent franchisors Co-operatives differ from other businesses in several ways: (pg. 195)  A different purpose  A different control structure  A different allocation of profit Chapter 7 – Entrepreneurship and Starting a Small Business Reasons why people are starting a business: (pg. 205)  New idea, process, or product  Independence  Challenge  Family pattern  Profit  Immigrants What Does It Take to Be an Entrepreneur? (pg. 206-207)  Self-directed  Determined  Action-oriented  Highly energetic  Tolerant of uncertainty 
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