Chapter 9 - Chapter 9 Stockholders Equity Dr. Ron Lazer...

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Dr. Ron Lazer Chapter 9 Page 1 Chapter 9 Stockholders’ Equity Dr. Ron Lazer Quiz Eight s Date: TBA s Content: (specific instructions will be provided during class) s Allowed material: b 4 function calculator Ron Lazer, Ph.D.
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Dr. Ron Lazer Chapter 9 Page 2 Financial Accounting GAAP The Accounting Information System Financial Statements Balance Sheet Income Statement Statement of Stockholders’ Equity Ron Lazer, Ph.D. Chapter 9 Objectives Corporations - Stockholders’ Equity: s Common stock s Preferred stock s Accounting for preferred and common s Treasury stock s Retained earnings s Dividends s Cash dividends s Stock dividends (and stock splits) s Property dividends s Ratios s Return on Assets s Return on Equity s Statement of stockholders’ equity Ron Lazer, Ph.D.
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Dr. Ron Lazer Chapter 9 Page 3 Types of Organizations s Proprietorship b single owner. b ownership activity through “Capital” and “Withdrawal” accounts. s Partnership b multiple owners. b ownership activity through multiple “Capital” and “Withdrawal” accounts (for each partner). s Corporation b multiple owners. b ownership activity through “Common/Preferred Stock”, “Retained Earnings” and “Dividend” accounts. Incorporating s Advantages: b Separate legal entity status b Perpetual duration – unlimited life b Separate liability for corporate debts (limited personal liability) b Easier to expand and grow (raising capital through sale of stock) b Ownership can be easily sold or transferred b Ownership and management are separated s Disadvantages: b Corporate formalities and government regulation b Cost s Both: b Taxation b Ownership and management are separated Ron Lazer, Ph.D.
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Dr. Ron Lazer Chapter 9 Page 4 Background on Stockholders’ Equity s The rights of shareholders usually include the right to: b Vote in affairs of the corporation b Share in corporate profits ( Dividends ) b Share in any assets left upon liquidation b Acquire shares of subsequent issues of stock ( Preemption ) s One of the most important rights of shareholders is limited liability. b Creditors of the corporation have claims on the assets owned by the corporation, not on the assets of the owners of the corporation. Ron Lazer, Ph.D. Background on Stockholders’ Equity s Corporations hold annual meetings of shareholders where votes are taken on important matters. s Naturally not all shareholders can attend every meeting. b Corporate proxy - a written authority granted by individual shareholders to others to cast the shareholders’ votes Ron Lazer, Ph.D.
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Dr. Ron Lazer Chapter 9 Page 5 Paid in Capital - Common Stock s The most basic form of equity. s Represents an ownership interest in the company. s
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This note was uploaded on 01/09/2010 for the course ACCT 2331 taught by Professor Staff during the Fall '08 term at University of Houston.

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Chapter 9 - Chapter 9 Stockholders Equity Dr. Ron Lazer...

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