Steve Osbourne is considering opening a business, but the major decision faced is how to organize the business. Steve anticipates generating a massive profit during the first year and that the following years should be relatively profitable. Although he has enough to start the business now as a partnership, he believes cash flow may be an issue as the company grows. Steve believes that the corporate form of operation will be his best option and have hired you as a consultant and seek your advice. a) Explain the corporate characteristic termed “no mutual agency” b) Explain the corporate characteristic termed limited liability.
Steve Osbourne is considering opening a business, but the major decision faced is how to organize the business. Steve anticipates generating a massive profit during the first year and that the following years should be relatively profitable. Although he has enough to start the business now as a partnership, he believes cash flow may be an issue as the company grows. Steve believes that the corporate form of operation will be his best option and have hired you as a consultant and seek your advice. a) Explain the corporate characteristic termed “no mutual agency” b) Explain the corporate characteristic termed limited liability.
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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Steve Osbourne is considering opening a business, but the major decision faced is how to organize the business. Steve
anticipates generating a massive profit during the first year and that the following years should be relatively profitable.
Although he has enough to start the business now as a partnership, he believes cash flow may be an issue as the
company grows. Steve believes that the corporate form of operation will be his best option and have hired you as a
consultant and seek your advice.
a) Explain the corporate characteristic termed “no mutual agency”
b) Explain the corporate characteristic termed limited liability.
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