Chapter 11 - Student - Ch 8 9 Ch 10 Ch 11 Chapter 11...

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Ch. 8 & 9 Ch. 10 Ch. 11
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Chapter 11: Stockholders’ Equity AIS 100 – Introductory Financial Accounting
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Study Objectives Identify and discuss the major characteristics of a corporation. Record the issuance of common stock. Explain the accounting for the purchase of treasury stock. Differentiate preferred stock from common stock. Prepare the entries for cash dividends and understand the effect of stock dividends and stock splits. Identify the items that affect retained earnings.
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Authorized stock Issuance Par and no-par value Accounting for common stock issues The Corporate Form of Organization Characteristics Formation Stockholder rights Purchase of treasury stock Dividend preferences Liquidation preference Stock Issue Considerations Accounting for Treasury Stock Preferred Stock Dividends and Retained Earnings Cash dividends Stock dividends Stock splits Retained earnings restrictions Financial Statement Presentation and Corporate Performance Balance sheet Statement of cash flows Dividend record Earnings performance Debt vs. equity decision Reporting and Analyzing Stockholders’ Equity
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u Separate Legal Existence u Limited Liability of Stockholders u Transferable Ownership Rights u Ability to Acquire Capital u Continuous Life u Corporate Management u Government Regulations u Additional Taxes Characteristics of a Corporation Advantages Disadvantages The Corporate Form of Organization
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Other Forms of Business Organization u Sole Proprietorship u Partnerships u Limited Partnership u Limited liability partnerships (LLPs) u Limited liability companies (LLCs) u S Corporation no double taxation cannot have more than 75 shareholders Characteristics of a Corporation The Corporate Form of Organization
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Forming a Corporation u File application with the Secretary of State. u State grants charter. u Corporation develops by-laws. Initial Steps: Companies generally incorporate in a state whose laws are favorable to the corporate form of business (Delaware, New Jersey). Corporations engaged in interstate commerce must obtain a license from each state in which they do business. The Corporate Form of Organization
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1. Vote in election of board of directors and on actions that require stockholder approval. Stockholders Rights 2. Share the corporate earnings through receipt of dividends. The Corporate Form of Organization
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3. Keep the same percentage ownership when new shares of stock are issued (preemptive right) . Stockholders Rights The Corporate Form of Organization
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4. Share in assets upon liquidation in proportion to their holdings. This is called a residual claim . Stockholders Rights The Corporate Form of Organization
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Authorized stock Issuance Par and no-par value Accounting for common stock issues The Corporate Form of Organization Characteristics Formation Stockholder rights Purchase of treasury stock Dividend preferences Liquidation preference Stock Issue Considerations Accounting for Treasury Stock Preferred Stock Dividends and Retained Earnings Cash dividends Stock
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