Textbook Notes (381,101)
CA (168,356)
UTSC (19,304)
MGT (1,095)
MGTA01H3 (583)
Chapter 4

Chapter 4 notes.

3 Pages
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Department
Management (MGT)
Course Code
MGTA01H3
Professor
Chris Bovaird

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Four Options of Legal Ownership of business: The sole proprietorship, the
!!!!partnership, the corporation, and the cooperative.
Sole Proprietorship: A business owned and operated by one person.
! ! Adv: Simplicity, freedom, easy to form, low start up costs, etc
! ! Disadv: Unlimited liability, lack of continuity, (legally dissolves when the
!!!owner dies), depends on resources *Financial and managerial
!!!skills* of one person, hard to borrow money.
Partnership: Formed when two or more persons operate a business for profit.
!!Must Begin by agreement (oral, written, etc). The agreements
! ! usually state how disagreements will be resolved, who invested how
! ! much money, who reports to who, how much profit is shared between
! ! partners, how partnership will be dissolved, how leftover assets be
! ! distributed among the partners.!!
!Two Types: General Partnership- All partners share the profits of business and
! ! have say managing the business, and are liable for the debts and other
! ! liabilities of the partnership business.
!!!Limited partnerships- Two kinds of partners, one general partner
! ! and one or more limited partners. General partners run the business and
! ! have unlimited personal liability for its debts.Limited partners do not
! ! participate in manaing the business, only share profits but is not
! ! personally liable for business. The most that they can lose is their
! ! investment. However, if a limited partner begins managing the business,
! ! they become a general partner and become liable for business.
!Adv: Ability to grow with talent and money. Easier to get loans. Simple to
! ! organize.
!Disadv: Unlimited liability for general partnerships. Lack of continuity (one dies
! ! or pulls out, partnership dissolves legally), Difficulty in transferring
! ! ownership. Partnership provides little or no guidance in resolving conflict
! ! between partners.
The Corporation: A business is a separate entity that is liable for its own debts
! ! and whose owners" liability is limited to their investment.
!-An artificial being, invisible, intangible and existing only in contemplation of the
!law.
!-Shareholders- investors who buy shares of a corporation, the real owners of the
! ! corporation. May share profits in form of dividends although not required
! ! to pay dividends and can reinvest any profits of the business.
!-Board of directors- Governing body of a corporation. Is responsible to ensure
! ! that the corporation is run in a way that its in the best interest of
! ! shareholders. (Chooses presidents and officers, sets policy on paying
! ! dividends on financing major spending, and on executive salaries and
! ! benefits.
!-Inside directors- Employees of the company and have primary responsibility for
!!!the corporation.(Top managers)
Management Chapter 4 Notes
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Description
Management Chapter 4 Notes Four Options of Legal Ownership of business: The sole proprietorship, the partnership, the corporation, and the cooperative. Sole Proprietorship: A business owned and operated by one person. Adv: Simplicity, freedom, easy to form, low start up costs, etc Disadv: Unlimited liability, lack of continuity, (legally dissolves when the owner dies), depends on resources *Financial and managerial skills* of one person, hard to borrow money. Partnership: Formed when two or more persons operate a business for prot. Must Begin by agreement (oral, written, etc). The agreements usually state how disagreements will be resolved, who invested how much money, who reports to who, how much prot is shared between partners, how partnership will be dissolved, how leftover assets be distributed among the partners. Two Types: General Partnership- All partners share the prots of business and have say managing the business, and are liable for the debts and other liabilities of the partnership business. Limited partnerships- Two kinds of partners, one general partner and one or more limited partners. General partners run the business and have unlimited personal liability for its debts.Limited partners do not participate in manaing the business, only share prots but is not personally liable for business. The most that they can lose
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