ACCT207 Chapter Notes - Chapter 11: Chief Financial Officer, Legal Personality, Double Taxation

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violetmuskrat44

7 Aug 2018

School

University of Delaware

Department

Accounting

Course

ACCT207

Professor

Vin Mar

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Document Summary

As a legal entity, a corporation has most of the rights and privileges of a person. We can classify corporation in a variety of ways. Two common classifications are by purpose and by ownership. A publicly held corporation may have thousands of stockholders, and its stock is traded on a national securities market such as the ny stock exchange. Privately held corporations often referred to as a closely held corporation, usually has only a few stockholders and does not offer its stock for sale to the general public. The chief ceo has overall responsibility for managing the business. The controller: maintains the accounting records, ensures an adequate system of internal control, prepares financial statements, tax returns, and internal reports. The t(cid:396)easu(cid:396)e(cid:396) has (cid:272)ustod(cid:455) of the (cid:272)o(cid:396)po(cid:396)atio(cid:374)"s fu(cid:374)ds a(cid:374)d o(cid:448)e(cid:396)sees the (cid:272)o(cid:373)pa(cid:374)(cid:455)"s (cid:272)ash position. The sarbanes oxley a(cid:272)t i(cid:374)(cid:272)(cid:396)eased the (cid:272)o(cid:373)pa(cid:374)(cid:455)"s (cid:396)espo(cid:374)si(cid:271)ilit(cid:455) fo(cid:396) the a(cid:272)(cid:272)u(cid:396)a(cid:272)(cid:455) fo(cid:396) these reports.

Related Questions

Match the items below by entering the appropriate answer letter choice from the column provided on the right.

	1.Net income retained in the corporation.
	2. Creditors cannot go after stockholderâs personal assets to satisfy their claims.
	3. Retained earnings currently unavailable for dividends.
	4. A corporationâs own stock that has been reacquired by the corporation.
	5. Responsible to stockholders for corporate activity.
	6. The amount assigned to each share of stock in the corporate charter.
.	7. The date the board of directors formally declares the dividend and announces it to stockholders.
	8. A debit balance in retained earnings.
	9. Capital contributed by stockholders.
	10. The death of a stockholder or employee does not affect the going concern of the corporation.
	11. The company determines ownership of the outstanding shares for dividend purposes.
	12. Unit of ownership in a corporation.
-	13. This type of dividend for the stockholder results in more shares of stock, but no change in ownership interest.
	14. The issuance of additional shares of stock to stockholders accompanied by a reduction in the par or stated value per share. This stock transaction does not require an accounting entry.
	15. The acts of the owners (stockholders) do not bind the corporation.

A.	Par value
B.	Record date
C.	Retained Earnings
D.	Indefinite life
E.	Treasury stock
F.	Stock split
G.	Declaration date
H.	Retained Earnings restrictions
I.	Stock dividend
J.	Capital stock
K.	Deficit
L.	Paid-in capital
M.	Cash dividend
N.	Board of directors
O.	Separate legal entity
P.	Limited liability

lilachorse885

QUESTION 1 The knowledge of financial accounting can assist people with decisions such as whether to extend credit to a business. True False 0.2 points Saved QUESTION 2 Employees of a company would not have a reason to use the information provided by financial accounting. True False 0.2 points Saved

QUESTION 3 Financial accounting should be used for assessing the financial health of large organizations only. True False 0.2 points Saved

QUESTION 4 Financial accounting can be helpful for a job candidate who is assessing the financial future of a potential employer. True False 0.2 points Saved QUESTION 5 Lenders might use the information produced by financial accounting when making loan decisions. True False 0.2 points Saved

QUESTION 6 Credit analysts prefer not to use information provided by financial accounting, as it is not accurate. True False 0.2 points Saved

QUESTION 7 Financial accounting is helpful to investment advisors. True False 0.2 points Saved

QUESTION 8 Financial accounting is more useful than managerial accounting. True False 0.2 points Saved

QUESTION 9 The decision to buy or rent equipment is an example of a decision aided by managerial accounting. True False 0.2 points Saved

QUESTION 10 Which of the following statements is true of financial accounting? A. It is used by external parties to make investment decisions. B. It is used to make lease or purchase decisions. C. Managerial accounting is another name for financial accounting, D. It is primarily used to make internal decisions of a business. E. The effectiveness of advertising can be judged using financial accounting. 0.2 points Saved QUESTION 11 The charge for using money over time, often associated with long-term loans, is known as: A. interest. B. principal. C. distribution charge. D. cash dividend. E. preferred dividend. 0.2 points Saved QUESTION 12 Which of the following is a common feature of financial and managerial accounting? A. Both have same objectives B. Both are prepared according to U.S. GAAP C. Both are reported at year end in the annual report D. Both are analyzed by external users while making investment decisions E. Both are used by the management in making decisions 0.2 points Saved

QUESTION 13 Dividends are required to be paid to stockholders on an annual basis. True False 0.2 points Saved

QUESTION 14 An individual who owns one or more shares of stock in a corporation is an owner of that corporation. True False 0.2 points Saved

QUESTION 15 Corporations do not exist as separate legal entities apart from their owners. True False 0.2 points Save Answer

QUESTION 16 It is very difficult to buy or sell ownership shares of a corporation in a stock exchange. True False 0.2 points Saved

QUESTION 17 Stock markets match up investors who wish to buy shares with those who wish to sell them. True False 0.2 points Saved

QUESTION 18 Legal process by which owners of an organization apply to a state government to have it identified as an entity legally separate from its owners is called: A. stocking. B. filling. C. attributing. D. registration. E. incorporation. 0.2 points Saved

QUESTION 19 An advantage of ownership in a sole proprietorship over ownership in a corporation is: A. tax benefits. B. having a board of directors. C. the ability to raise capital through issuance of stock. D. separation of owner and business as legal entities. E. limited liability for debts. 0.2 points Saved

QUESTION 20 Who hires the management of a corporation? A. Stockholders B. Board of directors C. Creditors D. Government E. SEC 0.2 points Saved QUESTION 21 Inventory refers to the: A. excess amount paid for an asset over its fair value. B. intangible assets of a business. C. merchandise bought or manufactured for the purpose of selling. D. amount of net income reinvested by company for future operations. E. revenue generated from investment. 0.2 points Saved QUESTION 22 Investors use financial information to predict whether a: A. company will recruit more employees. B. company's stock price will increase C. company has invested in buildings. D. company will pay salaries. E. company's bond price will increase. 0.2 points Saved

QUESTION 23 Financial accounting can be compared to a portrait. True False 0.2 points Saved

QUESTION 24 Financial statements provide the form and structure for the conveyance of financial information that will create a likeness of the reporting organization. True False 0.2 points Saved

QUESTION 25 The information reported in financial statements must be exact for an investor to make any decision. True False 0.2 points Saved

beigeant306

Express Chemical Company is a publicly traded company that has been operating at a profit for years.

Its officers (all of whom are stockholders) are concerned about the prospects of the company. Customers and employees claiming that toxic chemicals produced by the company caused their health problems have sued many similar firms. Lawsuits have yet been filed against Express, but the officers fully expect them to be filed within the next two years.

The officers hold 70% of the stock and estimate that their total stockholdings have a current market value of about $8 million (although its value would be much lower if all the facts were known). They are worried that if suits are filed and the company loses, there will not even be enough remaining assets to satisfy creditors' claims, and the officers' stock would be worthless. Private legal counsel informed the officers that the company is likely to lose any suits that are filed.

One of the officers suggested that they could at least receive something for their stock by having the company buy half of the shares held by the officers at a total price of $4 million. Another officer asked if such a treasury stock transaction would be legal. The response was that the transaction would be legal and retained earnings would be reduced to a zero balance. However, there would not be a debit balance because of the transaction.

If you were one of the officers, would you feel comfortable engaging in this proposed treasury stock transaction? Briefly explain.

What are your ethical responsibilities, if any, as they relate to the proposed treasury stock transaction?

ACCT207 Chapter Notes - Chapter 11: Chief Financial Officer, Legal Personality, Double Taxation

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