Vocabulary notes

rainforest n - тропический лес

astounding adj - поразительный, изумительный

resort n - курорт

crude petroleum n - сырая нефть

semiconductor devices n - полупроводники

appliances n - бытовые электроприборы

sawn logs n - древесина

sawn timber n - лесоматериалы

inquisitive adj - любопытный

6. Write an essay about the economy of any country you like. Use ex. 4 as a model for your essay. Read it to your classmates. Be ready to answer their questions.

UNIT 3

I. Text economic entity assumption

“Business opens doors of opportunity for

those who are prepared to put ideas into action”

- Louis E. Boone, Professor of Management

University of South Alabama

An economic entity can be any organization or unit in society operating a business. It may be a one-person business such as a bakery or a shoe repair shop round the corner; a firm operated by two or more persons such as a restaurant or a grocery store; a government agency that sells or provides services such as stamps; or a big corporation that manufactures and sells automobiles.

This assumption requires that the activities of the entity be kept separate and distinct from (1) the activities of its owner and (2) all other economic entities.

The legal form of ownership taken by a business is seldom of great concern for us as customers. When we eat at a restaurant, we probably don’t care whether a restaurant is owned by one person, has two or more owners who share the business, or is an entity owned by many stockholders; all we want is good food. Nonetheless, a business’s legal form of ownership affects how it operates, how much tax it pays, and how much control its owners have. The three most common forms of business ownership are sole proprietorship, partnership, and corporation. Each form of business ownership has its own characteristic internal structure, legal status, size, and field to which it is best suited. Each has key advantages and disadvantages for the owners, and each offers employees a distinctive working environment with its own risks and rewards.

Sole Proprietorships

A sole proprietorship is a business owned and operated by one person (although it may have many employees). It is the easiest and the least expensive form of business to start because no legal distinction separates the sole proprietor’s status as an individual from his or her status as a business owner. Many farms, retail stores (flower shops, clothing stores, jewelry stores), and small service businesses (barber shops, law offices, restaurants, cafes, and repair shops) are often sole proprietorships. Most proprietorships are small businesses employing fewer than 50 people. Sole proprietorships represent the largest number of businesses in the United States, but they are typically the smallest in size and volume of business.

Sole proprietorships have a number of advantages. For one, they are easy to form and dissolve. All you have to do to start a sole proprietorship is to obtain any necessary licenses, start a checking account for the business, and open your doors. As a sole proprietor, you have the satisfaction of working for yourself. You can make your own decisions, such as which hours to work, whom to hire, what prices to charge, whether to expand, and whether to shut down. Great operating flexibility and complete control over the business allows the owner to respond quickly to competitive business conditions or to changes in the economy. Best of all, you can keep all the profits, which are taxed once at your personal income rate tax and not at the higher corporate rate. As a sole proprietor, you also have the advantage of secrecy; you do not have to discuss publicly your operating plans, minimizing the possibility that competitors can obtain trade secrets. Financial reports need not be disclosed either.

Disadvantages of sole proprietorships include the limited potential for profit as the company’s financial resources are limited. A single person starting a company generally has less capital than a group of people and an individual may also have more difficulty getting a loan. Such financing limitations can keep the business from expanding.

The major disadvantage of a sole proprietorship is the proprietor’s unlimited liability. From a legal standpoint, the owner and the business are one and the same. It means that any damages or debts of the business can be attached to the owner. As a sole proprietor, you might have to sell personal assets, such as your family’s home, to pay off a business debt.

Managerial problems may also develop, as often the owner can’t afford to hire qualified specialists or experienced managers. A final disadvantage is that sole proprietorships often have a limited life; in other words the business may cease when the owner dies. And even if the business transfers to an heir, the owner’s unique skills may be crucial to the successful operation of the business.