Accounting 231- Class Notes for 1/29/16
Accounting 231- Class Notes for 1/29/16 ACC231
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This 2 page Class Notes was uploaded by Sophia Mattera on Monday February 1, 2016. The Class Notes belongs to ACC231 at Arizona State University taught by Eric Rosano in Spring 2016. Since its upload, it has received 56 views. For similar materials see Uses of Accounting Info I in Accounting at Arizona State University.
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Date Created: 02/01/16
Accounting 231- Class Notes for 1/29/16 Incorporating Liability goes down by incorporating and separating self from business A “corporate charter” is how it becomes a corporation Stock How many can we sell? What determines that? o You, the company, determines that through their corporate charter o Authorized Stock: the amount of stock that you ( the corporation) can potentially sell This does NOT create the stock, but allows for the possibility of stock that could potentially be sold o Outstanding Stock: stock issued/sold to external parties Stockholders may have rights o Voting rights; having a say on big ticket issues o Dividends: getting money back from profit o Liquidation: proportionate claim to assets being sold off if the company goes out of business o Preemption: your position wont change Contingent upon issuance of new stock Very uncommon Still would own the same percentage of total stock; first rights to buy them (i.e. If you own 10% of 100 stocks, but then the company issues 10 more stocks, you would have first dibs to buy 10% of the newly issued stock, or one new stock) o None of these “rights” are guaranteed o Usually people give up their right to vote, via proxy, or give up their vote to people who have more of a say in the company Different classes of stock o Common Stock Most common stock bought and sold More affordable to general public o Preferred Stock More expensive, but has more rights Dividend Priority: preferred stockholders get dividends before common stockholders (ie. If a company looses money and can only give dividends to some stockholders, then the preferred stockholders would be the only ones to get dividends) Preferred stockholders receive liquidated assets’ proceeds first o Common stock is more readily available, where as preferred stock is extremely expensive Issue Price: o the price offered at the IPO (initial public offer) Par Value: o The price of the stock at the current time o Most times the price is arbitrary o At Par –the stock is being sold at the par value o Above Par –the price of the stock is less than what it is being sold for
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