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Chapter 10

COMM 111 Chapter Notes - Chapter 10: Profit Margin, Retained Earnings, Asset Turnover

Course Code
COMM 111

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COMM 611
Chapter 10: Shareholders Equity
Explain the Main Features of a Corporation
Separate Legal Entity
Corporation is a business entity formed under federal or provincial law
A distinct entity that exists apart from its owners, the shareholders
Continuous Life and Transferability of Ownership
Shareholders may transfer wishes as they wish
Transfer of shares does not affect the continuity of the corporation
Limited Liability
Shareholders have no personal obligation to repay company liabilities
Most they can lose is cost of investment
One of the most attractive features of a corporation
Separation of Ownership & Management
Shareholders own the corporations, board of directors manage the business
Company managers run the business in interest of the shareholders
Can create conflict (i.e Enron)
Corporate Taxation
Pay separate income taxes than those of the individual shareholder
Government Regulation
Federal and provincial governments monitor corporations
Through the use of disclosing information in financial statements that
investors and creditors can use to make informed decisions
Shareholders Rights
1. The right to sell the shares
2. The right to vote
3. The right to receive dividends
4. The right to receive a residual interest upon liquidation
Shareholders Equity
1. Share capital amounts contributed by shareholders in exchange for shares
in the corporation
2. Contributed surplus any amounts contributed by shareholders I excess of
amounts allocated to share capital
3. Accumulated other comprehensive income past earnings, not retained
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