1. The World of Business and Accounting
Chapter 2 $
The World of Business and Accounting $
Making Accounting Relevant
Owning and operating a business takes special skills and traits. $
What skills do you think are important for the person who owns and operates a business? $

2. $ $ $ $ Section 1 Exploring the World of Business What You’ll Learn
Chapter 2 $
Section 1 Exploring the World of Business
What You’ll Learn
Profit and risk-taking.
The free enterprise system.
Starting and running your own business.
Three types of business operations.
Three forms of business organization. $ $ $

3. $ $ $ $ Why It’s Important Chapter 2
Section 1 Exploring the World of Business (con’t.)
Chapter 2 $
Why It’s Important
In order to participate in the world of business, you’ll want to understand how businesses are formed, organized, and operated. $ $ $

4. $ $ $ $ Key Terms Chapter 2 free enterprise system profit loss
Section 1 Exploring the World of Business (con’t.)
Chapter 2 $
Key Terms
free enterprise system
profit
loss
entrepreneur
capital
service business
merchandising business
manufacturing business
sole proprietorship
partnership
corporation
charter $ $ $

5. $ $ $ $ The Environment of Business Chapter 2
Section 1 Exploring the World of Business (con’t.)
Chapter 2 $
The Environment of Business
In a free (or private) enterprise system people are free to produce the goods and services they choose. $
Nike
IBM
local video rental store
clothing boutiques
local grocers
Tower Records $ $

6. $ $ $ $ The Need for Profit The Need for a Risk-Taker
Section 1 Exploring the World of Business (con’t.)
Chapter 2 $
The Need for Profit
The amount of money earned over and above the amount spent to keep the business operating is called profit. Businesses that spend more money than they earn operate at a loss. $ $
The Need for a Risk-Taker
Entrepreneurs transform ideas for products or services into real-world businesses. $

7. $ $ $ $ Entrepreneurship: Who Me? Chapter 2
Section 1 Exploring the World of Business (con’t.)
Chapter 2 $
Entrepreneurship: Who Me?
Have you ever considered owning a business? $
Cons
You probably need to work long hours.
You lose the security of steady wages and medical benefits an employer provides.
You market your own services or products.
You pay for your own operating expenses.
You must be motivated and energetic each day.
You face the possibility of losing money.
Pros
You are your own boss
You create opportunities for earning money.
You create and control your work schedule.
You choose the people you serve.
You select the people who work with you.
You benefit from the rewards of your own hard work.
You choose your own work hours. $ $

8. $ $ $ $ Types of Business Operations Chapter 2
Section 1 Exploring the World of Business (con’t.)
Chapter 2 $
Types of Business Operations
Service Businesses provide a needed service for a fee.
Merchandising Businesses buys finished products and resells them to individuals or other businesses.
Manufacturing Businesses buys raw materials, such as wood or iron ore, and transforms them into finished products through the use of labor. $ $ $

9. $ $ $ $ Forms of Business Organizations Chapter 2 Sole proprietorship
Section 1 Exploring the World of Business (con’t.)
Chapter 2 $
Forms of Business Organizations $
Sole proprietorship
Partnership
Corporation $ $

10. $ $ $ $ Sole Proprietorship Chapter 2 A business owned by one person.
Section 1 Exploring the World of Business (con’t.)
Chapter 2 $
Sole Proprietorship
A business owned by one person. $
Advantages:
Easy to set up
Owner has total control
Few regulations to follow
Disadvantages:
Limited expertise
Hard to raise money
Owner has all the risks
Hard to attract talented employees $ $

11. $ $ $ $ Partnership Chapter 2
Section 1 Exploring the World of Business (con’t.)
Chapter 2 $
Partnership
A business owned by two or more persons, who agree to operate the business as co-owners. $
Advantages:
Easy to start
Skills and talents are pooled
More money available
Disadvantages:
Conflicts between partners
Profits must be shared
Owners share all risks $ $

12. $ $ $ $ Corporation Chapter 2
Section 1 Exploring the World of Business (con’t.)
Chapter 2 $
Corporation
A business organization that is recognized by law to have a life of its own. $
Disadvantages:
Costs more to start up
Complex to organize
More regulations
Higher taxes
Advantages:
Easier to raise money
Easy to expand
Easy to transfer ownership
Losses limited to investment $ $

13. $ $ $ $ Check Your Understanding Chapter 2
Section 1 Exploring the World of Business (con’t.)
Chapter 2 $
Check Your Understanding $
Would you say that the advantages of being an entrepreneur outweigh the disadvantages or vice versa? Why? $ $

14. $ $ $ $ Check Your Understanding Chapter 2
Section 1 Exploring the World of Business (con’t.)
Chapter 2 $
Check Your Understanding $
Thinking Critically p31, 1&2
Problem 2-1 Complete in your workbook. $ $