ACC 211 Chapter 11.pdf

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Department
Accounting Business Administration
Course
ACC 211
Professor
Sicre
Semester
Fall

Description
Corpora▯on I. Advantages A. Simpler  to  become  an  Owner/Stockholder  (buy  stock) 1. Stockholder’s  Rights a) Vo▯ng  (in  person  or  by  proxy) b) Propor▯onate  distribu▯ons  of  profits  (dividends) c) Propor▯onate  distribu▯ons  of  assets  in  a  liquida▯on B. Easy  to  transfer  ownership  (sell  stock) C. Provides  limited  liability II. As  a  separate  legal  en▯ty,  it  can.. A. Own  Assets B. Incur  liabili▯es C. Sue  and  be  sued D. Enter  into  contracts Ownership  of  a  Corpora▯on 1. Stockholders  (owners  of  vo▯ng  shares) 2. Board  of  Directors  (elected  by  stockholders):  sets  dividends 2.1. Internal  (managers) 2.2. External  (non-­‐managers) 3. President  (appointed  by  directors) 4. Vice  Presidents 4.1. Produc▯on,  Marke▯ng,  Finance,  Control Earnings  per  Share  =            Net  Income  -­‐  Preferred  Dividends                                _     Average  Number  of  Shares  Outstanding  for  the  Period Stockholders  Equity I. Contributed  Capital A. Common  Stock,  par  value 1. Par  Value a) Nominal  Value (1) Legal  Capital:  amount  of  capital  required  by  state  that  must  remain  invested  in  business b) Par  Value  does  not  equal  Market  Value B. Capital  in  excess  of  par  value II. Retained  Earnings A. Beg.  RE  +  NI  -­‐  Dividends  =  End  RE Stock  Op▯ons:  allow  employees  to  purchase  stocks  from  the  corpora▯on  at  a  predetermined,  fixed  price Treasury  Stock:  Contra-­‐Equity,  no  vo▯ng  or  dividend  rights Dividends  on  Common  Stock A. Declared  by  board  of  directors B. Creates  liability  at  declara▯on C. Not  legally  required D. Requires  sufficient  RE  and  cash I. Dividend  Dates A. Date  of  Record:  Stockholders  receive  dividend  on  this  date  (no  entry) B. Date  of  Payment:  Record  dividend  payment  to  stock
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