Ch13-Test1 - Ch.13 Guideline-p.651, 662 Vocabulary P.665 1....

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Ch.13 Guideline-p.651, 662 Vocabulary – P.665 1. What laws the government formation of corporations? Where do you apply for charter?(p.638) A corporation is a separate legal entity formed under the laws of a particular state. For example, the state of New York may grant a charter , a document that gives the owners permission to form a corporation. Proprietorship, Partnership- not requires a state charter because they are the same as their owner. Organizing a corporation begins when the incorporators obtain a charter from the state. 2. Definition of double taxation (p.639) Corporate earnings are taxed to the corporation and the stockholder when earnings are distributed as dividends. 3. Advantages and disadvantages of forming corporations, several advantages, and few disadvantages (Double taxation) (p.639 EXHIBIT 13-1) Advantage: 1) Corporations can raise more money than a proprietorship or partnership. 2) Corporation has continuous life. 3) The transfer of corporate ownership is easy 4) there’s no mutual agency among the stockholders. 5) Stockholders have limited liability. Disadvantage: 1) Ownership and management are separated. 2) Double taxation. 3) Government regulation is expensive. 4. Journal entry for selling a stock at price greater its par value (above, premium) [Paid-in Capital: Preferred stock, 6%, $50 par, 100,000 shares authorized, none issued------$______ Common stock, $1 par, 500,000 shares authorized, 60,000 shares issued--$60,000 Paid-In capital in excess of par-common-----------------------------------------$40,000 Total Paid-In capital-----------------------------------------------------------------$100,000 Retained earnings---------------------------------------------------------------------$25,000
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This note was uploaded on 06/04/2010 for the course ACC 202 taught by Professor Mirman during the Spring '08 term at University of Nevada, Las Vegas.

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Ch13-Test1 - Ch.13 Guideline-p.651, 662 Vocabulary P.665 1....

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