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Business Organization Basics

A business firm purchases resources from households and other firms, transforms those resources into a commodity through production, and sells the transformed product or service to consumers. There are three main forms of business organization: sole proprietorships which are owned and controlled by a single individual; partnerships which have two or more owners; and corporations which are legally separate entities from their owners that can own assets, borrow money, and engage in business activities.

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23 views1 page

Business Organization Basics

A business firm purchases resources from households and other firms, transforms those resources into a commodity through production, and sells the transformed product or service to consumers. There are three main forms of business organization: sole proprietorships which are owned and controlled by a single individual; partnerships which have two or more owners; and corporations which are legally separate entities from their owners that can own assets, borrow money, and engage in business activities.

Uploaded by

Clint Abenoja
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Chapter 4 – Forms of Business Organization

Characteristics of a Business Firm


 Purchase productive resources from households and other firms
 Transform them into a different commodity
 Sell the transformed product or service to consumers

Forms of Business Organization


 Sole Proprietorship – a business owned by a single person who has complete control over business
decisions. The individual owns all of the firm’s asset and is responsible for all its liabilities.
 Partnership
 Corporation – an artificial being created by law and is a legal entity separate and distinct from its
owners. This legal entity may own assets, borrow money and engage in other business entities
without directly involving the owners.

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