Chapter 11 - Chapter 11 Reporting and Interpreting Owner's...

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Chapter 11: Reporting and Interpreting Owner’s Equity OWNERSHIP OF A CORPORATION Benefits of stock ownership Voice in management (vote in stockholder’s meeting) o Stockholders elect board of directors appoints president employs employees Dividends Residual claim (upon liquidation of company) Authorized, issued, and outstanding shares Authorized number of shares : charter specifies maximum number of shares available to sell to public Issued shares : total number of shares of stock already sold Treasury stock : stock that the company buys back from public Outstanding shares : total number of shares of stock owned by stockholders on any particular date; issued shares – treasury stock = outstanding shares COMMON STOP TRANSACTIONS Two types of stock… Common stock : basic voting stock issued by corporation Preferred stock Par value : nominal value per share of capital stock specified in charter; serves as basis for legal capital; no relationship with market value of stock Legal capital : permanent amount of capital defined by state law that must remain
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Chapter 11 - Chapter 11 Reporting and Interpreting Owner's...

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