PALCO, MYCHA ROSE A.

PALCO
PCEIT 02-301P

Research Work 1
1.What are the types of business organization?
Single/Sole Proprietorship
Partnership
Corporation
Cooperative
2. What are the advantages and disadvantages of every type?
a. Single/Sole Proprietorship
● A form of business organization initiated, organized, owned or capitalized and managed by a
single person ( usually the business owner ).
● Advantages: simplicity in creation, low cost to establish, owner receives all profits, owner
retains all decision-making authority, relatively unlimited control.
● Disadvantages: unlimited personal liability, owner responsible for all debts/liabilities, no
separation of owner from business,lack of continuity of the business.
b. partnership
● Two or more persons bind themselves to contribute money, property, or industry to a
common fund, with the intention of dividing the profits among themselves.
● Advantages: relative ease in formation, share profits equally (unless otherwise agreed upon),
larger pool of capital and talent, little government regulations, flexibility, business income taxed
as individual income.
● Disadvantages: unlimited liability for general partners, difficulty in disposing partnership
interest without dissolving partnership, potential for personal and authority conflicts,
partnership are bound by law of agency, lack of continuity.
c. Corporation
● An artificial being created by operation of law (BP 68), having the right of succession and the
powers, attributes and properties expressly authorized by law or incident to its existence.
● Advantages: limited liability of stockholders, ability to attract larger amounts of capital, ability
to have perpetual life, ease of transfer of ownership, larger pool of skills, talents, and
knowledge.
● Disadvantages: cost and time involved incorporation process, subject to corporate taxes,
potential for diminished managerial incentives, legal restrictions and regulatory red tape,
potential loss control by founder(s) of the corporation.

d. cooperative
● Advantages: tax privileges that the government usually provides amongst cooperative
organizations and other forms of privileges directed at its members, it can source its stocks or
inventories from suppliers who can offer concessionary terms to cooperative, provide direct
benefits to its members and the entire community.
● Disadvantages: inequality of profit distribution – with the same returns to all the members,
the enterprising or entrepreneurial member of the cooperative who spent much efforts will in
turn receive relatively lesser rewards.
3. What is common stock? Preferred stock?
Common stocks gives investors an ownership stake in a company. Many companies exclusively
issue common stock, and there's a lot more common stock selling on stock exchanges than
preferred stock while the preferred stocks often works more like a bond than common stock
does. Preferred stocks dividend yield are often much higher than dividends on common stock
and are fixed at a certain rate, while common dividends can change or even get cut entirely.
4. What is bond? Classification of bonds.
Bonds are debt instruments issued by corporations and a variety of government entities to raise
money to purchase assets and finance deficits. In effect the bond issuer borrows money from
the bond purchaser and agrees to pay interest at an established rate over a fixed period of
time. The "loan," or face value of the bond, is repaid at the end of the bond's term when it
matures. The bond serves as a contract between the two parties, with stipulations regarding
the obligations of the bond issuer to the bondholder. Bonds may also be classified according to
the reason for issuing them, such as school bonds, airport bonds, equipment bonds, or general
improvement bonds. Bonds may be secured or unsecured, which refers to whether or not the
bondholder has a specific claim against the assets of the bond issuer. Bonds also vary in terms
of principal and interest payments, and they may be registered or unregistered. Unregistered
bonds are also known as bearer bonds.