{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

BA 257 Chapter 11 class notes Kimmel

Accounting: Tools for Business Decision Making

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Chapter 11 Reporting and Analyzing Stockholder’s Equity Corporate form of business organization Organizing a Corporation Corporate charter obtained from state Organizational costs include legal fees, promoter’s fees, and amounts paid to obtain a charter Organization costs – expense in year incurred. Management of a Corporation See Illustration 11.1 pg. 536 Corporations are owned by stockholders (shareholders) Stockholders have ultimate control through vote to elect board of directors. Board of directors has final managing authority, but it usually limits its actions to establishing broad policy. Day-to-day direction of corporate business is delegated to executive officers appointed by the board. Characteristics of corporations: 1. Advantages: Continuous life Ease of transferring ownership No mutual agency of stockholders Separate legal entity *Limited liability to stockholders* Ability to raise capital 2. Disadvantages: Separation of ownership Double taxation (regular corp.) More government regulation BE11-1, pg. 566 Capitalizing corporations: Corporations are capitalized with debt and equity Accounting Equation: Assets = Liabilities + Stockholders’ Equity Ch. 10 Ch. 11 Note: Owner’s Equity for a Corporation is called “stockholders’ equity” or “shareholders’ equity” Stockholders’ Equity Two main components 1. Paid-in Capital (a.k.a Contributed Capital .) Amount the owners have paid for the stock of the corporation. Note: 1 share of stock = 1 unit of ownership
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
2 2. Retained Earnings Cumulative: Net Income minus Net Losses minus Dividends since the corporation began its existence. Note: R/E does not come from stockholders, and Paid-in Capital is not affected by net income or net losses. Retained earnings is increased by Net Income, decreased by Net Losses and Dividends Closing entry to close income summary (after you close all revenue and expense accts. through the income summary account): Example:
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern