Chapter 6 Vocabulary

By Daniela Lopez Period 2

Corporation

Definition: a business owned by a group of people and authorized by the state in which it is located to act as though it were a single person, separate from its owners. Example: Walmart.

Charter

Definition: The official document through which a state grants the power to operate as a corporation. Example: None available.

Stockholders

Definition: Owners of a corporation. Example: Dustin Moskovitz (Facebook shareholder).

Shares

Definition: Equal parts of the division of ownership in a corporation. Example: None available.

Dividends

Definition: Dividends are profits that are distributed to stockholders on a per-share basis. Example: When a corporation earns a profit or surplus, it can either reinvest it in the business (called retained earnings), or it can distribute it to shareholders.

Board of directors

Definition: The ruling body of the corporation. Example: The Facebook, Inc. Board of Directors

Officers

Definition: The top executives who are hired to manage the business. Example: A president, a secretary, and a treasurer.

Capital stock

Definition: The general term applied to the shares of ownership of a corporation. Example: The example written in the textbook talks about 3 business partners (York, Burton, and Chan). They asked the state they lived in for authorization to issue a million dollars in capital stock.

Proxy

Definition: A written authorization for someone to vote on behalf of the person signing the proxy. Example:

Close corporation

Definition: One that does not offer its shares of stock for public sale. Example: York, Burton, and Chan, Inc., is an example of a close corporation. The three former partners own all the stock and operate the business as well.

Open corporation

Definition: One that offers its shares of stock for public sale. Example: Facebook, Inc.

Prospectus

Definition: A formal summary of the chief features of the business and its stock offering. Example:

Joint venture

Definition: An agreement among two or more businesses to work together to provide a good or service. Example: Sony Ericsson.

Virtual corporation

Definition: A network of companies that form alliances among themselves as needed to take advantage of fastchanging market conditions. Example: Nike, the worlds largest athletic shoe and sports apparel company, is a virtual corporation. Nike manufactures and markets its products worldwide. A large network of Asian companies purchase materials and manufacture shoes and other apparel products in countries such as China, Taiwan, Indonesia, and Korea.

Limited liability company (LLC)

Definition: A special type of corporation allowed by states that is taxed as if it were a sole proprietorship or partnership. Example: Chrysler Group LLC.

Non-profit corporation

Definition:An organization that does not pay taxes and does not exist to make a profit. Example: Organizations that manage cities or operate schools are examples of nonprofit corporations.

Quasi-public corporation

Definition: A business that is important to society but lacks the profit potential to attract private investors is often operated by local, state, or federal government. Government financial support (called a subsidy) may also be required. This type of business is usually described as a quasi-public corporation. Example: The Tennessee Valley Authority.

Cooperative

Definition: A business owned and operated by its usermembers for the purpose of supplying themselves with goods and services. Example: Organic Meadow Cooperative.