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Accounting
Chapter 2
| Term | Definition |
|---|---|
| Free enterprise system | A system in which individuals are free to produce the goods and services they choose. |
| profit | The amount earned above the amount of expense incurred to keep the business operating. |
| loss | The result when a business spends more money than it earns. |
| entrepreneur | A person who transforms ideas for products or services into real-world businesses. |
| capital | Money supplied by investors, banks, or owners of a business. |
| service business | A business that provides a needed service for a fee. |
| merchandising business | A business that buys finished goods and resells them to individuals or other businesses. |
| manufacturing business | A business that buys raw materials and transforms them into finished products by using labor and machinery |
| sole proprietorship | A business owned by one person. |
| partnership | A business owned by two or more persons, called partners, who agree to operate the business as co-owners. |
| corporation | A business organization recognized by law to have a life of its own |
| charter | The legal permission, granted by a state, that gives a corporation certain rights and privileges and spells out the rules under which the corporation is to operate. |
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