Terms13-16 - Ch 13 1 From a legal perspective a corporation...

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Ch. 13 1. From a legal perspective, a corporation is totally separate entity from its owners. 2. Stockholders have limited liability for the corporations’ debts. 3. Corporate earnings are subject to double taxation . 4. The process of incorporation starts by obtaining a charter from the state. 5. Stockholders elect a board of director which sets policy and appoints officers. 6. The owners’ equity of a corporation is called stockholders’ equity . 7. Paid in Capital is the stockholders’ investment in the company. 8. Retained earnings is capital that the corporation has earned from profits. 9. Stock that is held by stockholders is said to be outstanding . 10. The entry to close net income for a corporation includes a debit to Income Summary and a credit to Retained Earnings . 11. Distributions of a corporations’ cash to stockholders made by a profitable corporation are called Dividends . 12. The 4 basic rights of stock ownership are vote, dividends, liquidation, and preemption . 13. The basic form of stock is called Common Stock . 14. Preferred stockholders have the rights to receive dividends before the common stockholders. 15. Par Value is an arbitrary amount assigned to a share of stock. 16. When stock is issued , the amount recorded in the capital stock account is the Par Value of the shares issued. 17. Additional paid in capital represents the Premium paid above par for the shares issued. 18. When a company issues no-par stock , there can be no Premium . 19. Accounting for no-par stock with a stated value is the identical to accounting for stock with a par value.
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20. The 3 relevant dates for dividends are Declaration date, Date of record, and Payment date.
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Terms13-16 - Ch 13 1 From a legal perspective a corporation...

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