Exercise 2. Fill in the gaps in the text using the provided words: bankruptcy, corporations, creditors, issue
Exercise 2. Fill in the gaps in the text using the provided words: bankruptcy, corporations, creditors, issue, liability, losses, partnership, registered shares, sole trader, financial, premises, capital, prospectus, files. The most elementary type of business is when one person owns and operates it, known as a (1) ____________. For instance, a shop or taxi owned by a single individual. If multiple individuals wish to collaborate in running a business, they can establish a (2) ____________. In a partnership, partners usually contribute equal (3) ____________, have equal management authority, and share profits or (4) ____________. Lawyers, doctors, and accountants are often not allowed to form this type of business in many countries
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and share equally in the (4) ____________ and (5) ____________ of the business. However, partnerships also come with some drawbacks. For instance, partners have unlimited (6) ____________ for the debts and (7) ____________ of the partnership. This means that if the partnership incurs significant (8) ____________ or goes into (9) ____________, the partners" personal assets can be used to pay off the debts.Another type of business structure is a (10) ____________. This is a separate legal entity from its owners, known as shareholders. Shareholders hold (11) ____________ in the company, which represents their ownership interest. Unlike partnerships, shareholders" liability is usually limited to the amount they have invested in the company. In the case of (12) ____________, creditors can only make claims to the assets of the corporation and cannot go after shareholders" personal assets.
When a corporation wants to raise (13) ____________ for its operations or expansion, it can (14) ____________ shares to the public through an initial public offering (IPO). To provide potential investors with information about the company, the corporation prepares a (15) ____________. This document contains important details about the company"s operations, financial performance, and risks associated with investing in the company. The prospectus is then (16) ____________ with the relevant regulatory authorities.
In addition, corporations are required to keep proper (17) ____________ of their financial transactions, including income, expenses, assets, and liabilities. This information is used to prepare financial statements and reports, which provide insights into the company"s (18) ____________ health. Proper financial record-keeping is essential for decision-making, tax compliance, and providing transparency to (19) ____________ and other stakeholders.
Overall, understanding different types of businesses, their legal structures, and financial responsibilities is crucial for aspiring entrepreneurs and anyone interested in the world of business.