ACCT 2001 Chapter 11 Class Notes

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ACCT 2001
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Accounting 2001Chapter 11 Notes1Identify and discuss the major characteristics of a corporation2Record the issuance of common stock3Explain the accounting for the purchase of treasury stock4Differentiate preferred stock from common stock5Prepare the entries for cash dividends and understand the effect of stock dividends and stock splits6Identify the items that affect retained earningsThe Corporate Form of OrganizationSeparate Legal ExistenceoCorporation acts under its ownrather than in the name of its stockholdersLimited Liability of StockholdersoLimited to their Transferable Ownership RightsoShareholders may sell their Ability to Acquire CapitaloCorporation can obtainthrough the issuance of stockContinuous LifeoContinuance as ais not affected by the withdrawal death or incapacity of a stockholder employee or officerCorporate ManagementoSeparation of ownership andprevents owners from having an active role in managing the companyGovernment RegulationsoCompany is affected bylaws SEC laws stock exchange requirements andregulationsAdditional TaxesoCorporations pay income taxes as a separateentity and stockholders pay taxes on cash 1Accounting 2001Chapter 11 NotesCharacteristics of a CorporationForming a CorporationFile application with the Secretary of StateState grants Corporation develops Companies generally incorporate in a state whose laws are favorable to the corporate form of business Delaware New JerseyCorporations engaged in interstate commerce must obtain a license from each state in which they do businessStockholders Rights1Vote in election of board ofand on actions that require stockholder 2Share the corporatethrough receipt of dividends3Keep the same percentage ownership when new shares ofare issued This is called right2
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