基础会计(英文版)(第二版)Chapter12 Corporation Organization and StockholdersEquity.ppt

Chapter 12 Corporation: Organization and Stockholders’ Equity What Is a Corporation? A corporation is a legal entity having an existence separate and distinct from that of its owners. Thus, the assets of a corporation belong to the corporation itself, not to the stockholders. Advantages and Disadvantages of a Corporation? Advantages: Limited liabilities for stockholders Ease of accumulating capital Ownership shares are readily transferable Professional management Advantages and Disadvantages of a Corporation? Disadvantages : Double taxation Greater regulation Accounting for a Corporation Stockholders Equity Retained Earnings Capital Stock Authorization and Issuance of Capital Stock Stock issued for Assets Other Than Cash Book Value per Share of Common Stock Stockholders Equity Retained Earnings Retained Earnings = Accumulated Earnings –Losses － Dividends Capital Stock Capital stock represents the amount invested by the owners of the business. When the owners of a corporation invest cash or other assets in the business, the corporation issues capital stock as evidence of the investors ownership equity. Authorization and Issuance of Capital Stock common stock preferred stock par value vs. market value Authorization and Issuance of Capital Stock Common stockholders have the following three basic rights: the right to vote for directors the right to share in profits by receiving dividends the right to share in the distribution of assets if the corporation is liquidated Authorization and Issuance of Capital Stock  Preferred stocks have the following distinctive features: preferred as to dividends cumulative dividend rights preferred as to assets in event of the liquidation of the corporation callable at option of the corporation no voting power Stock Issued for Assets other than Cash A corporation may issue shares of its capital stock in a direct exchange for assets or for services. Book Value per Share of Common Stock an accountin