Notes, summaries, assignments, exams, and problems for Economy

Forms of Business Organization

Sole Proprietorship

Introduction and Definition

Introduction, Definition

Characteristics

• Single ownership
• No separate legal entity
• Less legal formality
• Unlimited liability
• Secrecy
• Flexibility
• Risk
• No sharing of profit or loss

Advantages

• Easy to form and wind up
• No profit sharing
• Better control
• Secrecy
• Flexibility
• Personal touch

Disadvantages

• Unlimited liability
• Limited capital
• Lack of managerial expertise
• Lack of continuity

Joint Stock Company (JSC)

Joint Stock Company Overview

• Introduction
• Definition
• Features
• Advantages
• Disadvantages
• Types of companies
• Incorporation of JSC
• Legal documents
• Management

Memorandum vs. Articles of Association

• Definition
• Main object
• Subject matter
• Obligation
• Registration
• Significance
• Relationship
• Provision
• Legal status

Private

Clients, Customers, and Consumers

• Customer: A person who buys a product but is not a habitual client.
• Client: A person who usually buys a product.
• Consumer: A person who uses a product but does not necessarily pay for it.

Consumer Protection

Consumers are at the end of the distribution channel. A consumer purchases a product or service for direct use, not for reselling or for further production. The following stages in the distribution chain of goods from their production to the time they reach the end user.

The manufacturer is the party that makes the product. This is stage 1.

The wholesaler is the intermediary who buys products from the manufacturer and sells them on to the retailer. This is stage 2.

The retailer is the party who sells the product... Continue reading "Understanding Consumer Rights and Legal Protection in Spain" »

T.11 1. Is

the organization design of the MNE a function of its strategy or vice versa? Is both a function of its strategy and its design also drives its strategy. The objective of organization design is to provide, maintain, and develop the organizational structure that works best toward the achievement of firm’s strategic objectives into workable assignments of rights, duties, and responsibilities for the various units and individual positions that make up the organizational apparatus. The structure can represent a constraint on the firm’s mode of operations and in turn on its strategic thinking.

2. If you

were a top manager in a subsidiary in Mexico, would you expect similar to subsidiaries in London in authority, knowledge flow, or strategic... Continue reading "Global Organization Design and Integration Strategies" »

Chapter 15

Which one of the following statements is the MOST accurate?

D) A rise in the average value of transactions carried out by a household or a firm causes its demand for real money to rise.

If there is initially an

B) excess supply of money, the interest rate will fall, and if there is initially an excess demand, it will rise.

Which one of the following statements is the MOST accurate?

D) An increase in the money supply lowers the interest rate while a fall in the money supply raises the interest rate, given the price level and output.

An increase in

E) real output raises the interest rate while a fall in real output lowers the interest rate, given the price level and the money supply.

The aggregate real money demand schedule L(R,Y)

D) slopes... Continue reading "Effects of Money Supply on Interest Rates and Currency Values" »

Core Business Fundamentals and Economic Concepts

Defining Business and Its Resources

Business

Business is the organized effort of individuals to produce and sell, for a profit, the goods and services that satisfy society’s needs. The term refers to all such efforts within a society. A business is a particular organization that must perform three core activities:

• Be organized.
• Satisfy needs.
• Earn a profit.

Material Resources

These include raw materials used in the manufacturing process, as well as buildings and machinery.

Sales Revenue

The money a business receives from its customers in exchange for goods or services.

Profit

What remains after all business expenses have been deducted from sales revenue.

Economic Principles

Economy

The way in which people... Continue reading "Essential Business Concepts and Economic Definitions" »

Unit 2

1. Market Types: Understanding the Differences

Differences between the current market, potential market, objective market, and product-market.

• Current market: The demand for a specific product.
• Potential market: The maximum number of potential buyers.
• Objective market: The market a company targets with its products.
• Product market: Products regarded as substitutes.

2. Types of Markets Based on Competition

Types of markets according to the number of competitors.

• a) Monopoly
• b) Oligopoly
• c) Monopolistic Competition
• d) Perfect Competition

3. What is a Franchise?

What is a franchise? (Que es una franquicia?) A franchise is a contractual relationship that covers a wide range of service provisions, goods supply, leasing of a commercial name or brand on... Continue reading "Market Analysis: Current, Potential, and Objective Markets" »

Financial Markets Explained

Financial markets are platforms where individuals and businesses trade financial securities, commodities, and other fungible items of value. These markets operate at low transaction costs, with prices determined by supply and demand. They facilitate the transfer of funds from those with excess capital (lenders or savers) to those with investment opportunities (borrowers or spenders).

Methods of Fund Transfer

• Direct financing: Funds are transferred directly from ultimate savers to ultimate borrowers.
• Indirect financing: A financial intermediary transforms financial claims with one set of characteristics into claims with different characteristics.

Classification of Financial Markets

Market Types by Issuance

• Primary markets:

IFRS for Small and Medium-Sized Entities (SMEs)

What are *not* the IASB's Objectives?

To strive for worldwide use of International Accounting Standards instead of national accounting standards.

What is the Primary Function of the IASB?

To develop and publish IFRS and strive for their worldwide use in general-purpose financial statements and other financial reporting.

What is the Primary Objective of IFRS?

IFRS sets out recognition, measurement, presentation, and disclosure requirements dealing with transactions and other events and conditions that are important in general-purpose financial statements.

What are the Major Differences Between IFRS and US GAAP?

Compared to US GAAP, IFRS are more principles-based, objective-oriented, and with emphasis on... Continue reading "IFRS for SMEs: Understanding Key Concepts and Applications" »

The Importance of the Economic Cycle

The economic cycle is important because of its direct impact on jobs and income.

Defining an Unemployed Person

A person is officially defined as unemployed if they meet the following four criteria:

• Working Age: They are 16 years old or older, with no upper age limit.
• Has No Job: Working even one hour or more in the survey week classifies a person as employed.
• Available for Work: They are not in an institution (such as a nursing home) and are not a full-time student.
• Looking for Work: They have actively looked for work in the last four weeks, unless they are waiting for recall after a layoff, have been hired and are waiting to start a new job within 30 days, or were prevented from looking by a temporary sickness.

Section 1: Collecting and Organizing Information

Accounting is an information system that reports on the economic activities and financial condition of a business or other organization.

1.1 Identifying the Ways Accounting Benefits Society

Accounting provides information that helps answer questions such as:

• How should society allocate its resources?
• Should we spend more money to harvest food or cure disease?
• Should we build computers or cars?
• Should we invest money in IBM or General Motors?

Market-Based Allocations

A market is a group of people or entities organized to exchange items of value. Common terms for the added value created in the transformation process include profit, income, and earnings.

Financial Resources

Businesses need financial resources... Continue reading "Accounting: An Information System for Resource Allocation" »