会计英语Chapter_8_Owners’_Equity—the_Corporation教材教学课件.pptVIP

出版社 经管分社 会计英语 Chapter 8 Owners’ Equity—the Corporation Learning Objectives 1.Know advantages and disadvantages of the corporation form of organization. 2.Know formation of a corporation. 3.Know authorization and issuance of capital stock. 4.Describe the difference types of dividends. 5.Account for retained earnings. 6.Account for corporate income taxes. 8.1 Advantages and Disadvantages of the Corporation Form of Organization 8.1.1 Advantages of the Corporation Form of Organization The corporation offers a number of advantages not available in the other forms of organization. Among these advantages are the following. 1)Separate Legal Entity A corporation is a legal entity created on the approval of the appropriate governmental authority. It may acquire assets in its own name, and it can incur debts, conduct business, enter into contracts, pay income taxes on its earnings and sue. 2)No Personal Liability for Stockholders The liability of shareholders with respect to company affairs is usually limited to their equity in the corporation. Because of this limited liability, the government places rigid controls on the distribution of contributed capital. Distributions of retained earrings (undistributed profits) are not legal unless the board of directors formally declares a dividend.  3)Ease of Transferring Ownership Rights Shares in a corporation may be routinely transferred without affecting the operations of the company. Although corporations must have stockholders’ records in order to notify shareholders of meetings and to pay dividends, no accounting recognition is given to the individual or aggregate price for which transfers are made. 4)Continuity of Existence Because routine transfers of ownership do not affect a corporation’s affairs, the corporation is said to have continuity of existence .In this respect, a corporation is completely different from a partnership