B. Understanding details. Mark these statements T (true) or F (false) according to the information in the text. Find the part of the text that gives the correct information.

1. Small business hires about 10 employees.

2. There is limited liability to the owner of a small business.

3. Any owner of a small business pays taxes as an individual owner.

4. It is easy for a sole proprietorship to raise funds.

5. Partnership is multiple ownership.

6. Articles of partnership are an agreement between the owners

7. There are more advantages of partnership in comparison with a sole proprietorship.

8. The owners of partnership share equally losses and profits.

Vocabulary tasks

A. Definitions. Match these terms with their definitions.

B. Use an appropriate word from the box to complete each sentence:

a. The advantages of a sole proprietorship is __________ of decision making and low organizational and operating costs.

b. The disadvantage of a sole proprietorship is unlimited liability to the _________.

c. The owner can lose both the capital invested and personal __________.

d. The corporation pays a tax on profits and the owners pay a tax on any distributed ________.

e. Approximately 75 percent of the 21 million business firms are organized as ________.

f. It is easy to raise more __________ for multiple ownership.

g. Some partners are designed __________ partners and are liable only for their initial contribution.

h. The profits and losses of partnership are allocated directly to the partners, for _________ purposes.

Unit 8

Corporation

In terms of revenue and profits produced, the corporation is by far the most important type of economic unit. While only 19 percent of U.S. business firms are corporations, over 90 percent of sales and over 70 percent of profits can be attributed to the corporate form of organization. The corporationis unique – it is legal entity into itself. Thus the corporation may sue or be sued, engage in contracts, and acquire property. A corporation is formed through articles of corporation,which specify the rights and limitations of the entity.

A corporation is owned by shareholders who enjoy the privilege of limited liability, meaning their liability exposure is generally no greater than their initial investment. A corporation also has a continual life and is not dependent on any one shareholder for maintaining its legal existence.

A key feature of the corporation is the easy divisibility of the ownership interest by issuing shares of stock. While it would be nearly impossible to have more than 50 or 100 partners in most business, a corporation may have more than a million shareholders is General Motors.

The shareholders’ interests are ultimately managed by the corporation’s board of directors. The directors, who may include key management personnel of the firm as well as outside directors not permanently employed by it, serve in a stewardship capacity and may be liable for the mismanagement of the firm or for the misappropriation of funds. Outside directors of large public corporations may be paid more than $25.000 a year to attend meetings and participate in important decisions.

Because the corporation is a separate legal entity, it reports and pays taxes on its own income. As previously mentioned, any remaining income that is paid to the shareholders in the form of dividends will require the payment of a second tax by the shareholders. One of the key disadvantages to the corporate form of organization is this potential double taxation of earnings.

Reading tasks

A. Understanding main points. Answer these questions:

1. Why is the corporation considered to be unique?

2. What is a key feature of the corporation?

3. Who are the owners of a corporation?

4. How is the divisibility of the ownership interest done?

5. How is a corporation formed?

6. What does the articles of incorporation specify?

7. What kind of liability do shareholders enjoy?

8. What is the key disadvantage of a corporation?

B. Understanding details. Mark these statements T (true) or F (false) according to the information in the text:

1. Shareholders have limited liability.

2. Legal existence of a corporation depends on any one shareholder.

3. As a legal entity, the corporation may sue or be sued.

4. Articles of incorporation do not specify the rights but limitations of do a corporation.

5. Issuing shares of stock is a key feature of the corporation.

6. Board of directors manage the corporation.

Vocabulary tasks

A. Use an appropriate word from the box to complete each sentence:

1. The articles of corporation specifies the rights and __________ of the corporation

2. __________ of the corporation and their interest are managed by the board of directors.

3. The corporation is a legal __________ and it may sue or be sued.

4. Legal existence of the corporation does not depend on any one _________.

5. The directors may be __________for the mismanagement of the firm.

6. The corporation pays __________ on its own income.

7. __________ are a form of payment to the shareholders.

8. A second tax is __________ by the shareholders on dividends.

B. Match the verbs and nouns:

C. Prepositions. Complete these sentences with an appropriate preposition:

1. The corporation is the most important type __________ economic unit.

2. 70 percent of profits can be attributed __________ the corporate form of organization.

3. The corporation is engaged __________ contracts.

4. A corporation is formed __________ articles of corporation.

5. A corporation is owned __________ shareholders.

6. A corporation is not dependent __________ any one shareholder.

7. A corporation is managed __________ the board of directors.

8. Board of directors is liable __________ the mismanagement of the firm.

Unit 9

Date: 2016-04-22; view: 1460