ACCT I S 100 Chapter Notes - Chapter 11: Net Income, Preferred Stock, Issued Shares

• School: UW-Madison
• Department: Accounting And Info Systems
• Course: ACCT I S 100
• Professor: Warfield Terry

Document Summary

Corporations can be classified in two ways: by purpose profit, non-profit, educational, by ownership publicly or privately held. Separate legal existence not treated as a person. Limited liability of stockholder"s you are only liable up to the amount of your investment. Transferable ownership rights easy to buy and sell stock on the open market. Ability to acquire capital one of the advantages of a corporation. Continuous life unlike sole proprietorships or some partnerships, corporations continue even after some owners die (perpetual life: disadvantages: Government regulations: there are also many government regulations that surround corporations, such as the sarbanes-oxley act. Double taxation concept: corporations pay taxes as a legal entity, and then shareholders are taxed on any dividend distributions. Create a charter document, establish by-laws, and obtain a license in each state you do business. Shareholder rights: vote in board elections and other actions, receive dividends, preemptive right keep the same ownership percentage, residual claim upon liquidation (after lenders and creditors)