F: Comprehension questions

Paragraph 6 discusses the corporation. You have noticed that the dis­cussions of the sole proprietorship and the partnership had some simi­larities of form. The outlines parallel each other. Read the following questions about Paragraph 6.

1. From the first sentence do you expect that the discussion of the corporations will parallel the discussions of the sole proprietorship and partnership in form?

2. Are the other two forms of legal organization more similar to each other than to the corporate form of ownership?

3. What is a difference in the way a corporation raises capital?

4. What happens to the profits of a corporation?

5. How can a stockholder terminate his interest in a corporation?

6. If a corporation goes bankrupt, how does this differ from the bank­ruptcy of a sole proprietorship or partnership?

7. What is a problem associated with the size of a corporation?

G: Rephrasing words

Rewrite the following sentences. Replace the words in italics with expressions from the text which have the same meaning.

1. The sole proprietor may keep all the profits derived from his busi­ness.

2. A sole proprietorship is the easiest to initiate and the easiest to terminate.

3. There is the opportunity to be successful, but also the owner takes a chance on financial ruin.

4. His personal assets can be used to pay the debts in the event of bankruptcy.

5. The joint owners owe all the liabilities and pay personal income taxes on their part of the profits.

6. The ability to borrow money is greater in a partnership because the personal property of the partners can be used to get a loan.

7. In the case of business failure, the responsibility of the corporation for its debts is limited.

8. The board of directors keeps part of the profits to increase the capital of the corporation.

9. The stockholders pay personal income taxes on their profits from stock.

10. The activities of the corporation are closely watched by the govern­ment.

H: Writing and organizing a paragraph

The topic sentence of a paragraph tells us what the paragraph is about. It should state the ideas which are going to be discussed in the para­graph. The last sentence is often a summary. Sometimes the concluding sentence of a paragraph does not only summarize what has been said, but may also point out another side of the topic which has not been discussed.

Write a paragraph emphasizing the similarities between a sole pro­prietorship and a partnership. In your first, or topic sentence, write what the similarities are. Then write two sentences about each simi­larity. Conclude your paragraph by mentioning that besides these simi­larities, there are some differences.

Glossary

Ability: a skill or a talent; the capacity or capability to do something.

He has the ability to type 60 words per minute.

This company has the ability to increase production using the present equipment.

Because of my experience as a banker, I have the ability to make financial decisions.

Access: the means of getting to something.

A corporation has a greater access to capital than does a sole pro­prietor.

Articles of co-partnership: the agreement telling the terms and condi­tions of a partnership.

The articles of co-partnership should also provide a method of selling the business.

Articles of incorporation: the agreement telling the terms, conditions and purposes of a corporation. These must be filed in the state where the corporation is chartered.

My lawyer will draw up the articles of incorporation.

Asset: (often plural) anything of value to a company. Anything which can be sold or converted into cash.

The partners each own a share of the assets of the partnership.