COMMERCE 1AA3 Chapter Notes - Chapter 10: Retained Earnings, Share Capital, Common Stock

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 1AA3
• Professor: Emad Mohammad

Document Summary

Advantages: corporate management, professional management, separate legal existence, limited liability of shareholders, deferred or reduced taxes, transferable ownership rights, ability to acquire capital, continuous life. Disadvantages: corporation management, ownership separated from management. I(cid:374)(cid:272)(cid:396)eased (cid:272)osts a(cid:374)d (cid:272)o(cid:373)ple(cid:454)it(cid:455) i(cid:374) o(cid:396)de(cid:396) to adhe(cid:396)e to go(cid:448)"t (cid:396)egulatio(cid:374)s: additional taxes. Shareholders elect a board of directors, who elect a chairperson (the most powerful person in the organization). Shareholder have four basic rights: right to sell shares--- which may be restricted in certain circumstances, right to vole --- to participate in management by voting on matters. Accumulated other comprehensive income which is an accumulation is past earnings not included in retained earnings: retained earnings are the accumulated (cid:271)ala(cid:374)(cid:272)e of (cid:272)o(cid:396)po(cid:396)atio(cid:374)"s (cid:374)et i(cid:374)(cid:272)o(cid:373)e/loss si(cid:374)(cid:272)e inception less dividends declared. Companies sometimes issue shares in return for assets other than cash. Issuing shares --- increases assets (as cash is receives), and increases she (more shares outstanding)