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1、Chapter 12-1Chapter 12-2Corporations: Organization, Stock Transactions, Dividends, and Retained EarningsChapter 12Financial Accounting, Sixth EditionChapter 12-3l Identify the major characteristics of a corporation.l Record the issuance of common stock.l Explain the accounting for treasury stock.l D
2、ifferentiate preferred stock from common stock.l Prepare the entries for cash dividends and stock dividends. l Identify the items that are reported in a retained earnings statement.l Prepare and analyze a comprehensive stockholders equity section.Study ObjectivesChapter 12-4Cash dividends Stock divi
3、dends Stock splitsCorporate Organization and Stock TransactionsDividendsRetained EarningsStatement Presentation and AnalysisCorporate form of organization Common stock issuesTreasury stock Preferred stockRetained earnings restrictionsPrior period adjustmentsRetained earnings statementPresentation An
4、alysisCorporations: Organization, Stock Transactions, Dividends and Retained EarningsChapter 12-5An entity separate and distinct from its owners.The Corporate Form of OrganizationClassified by PurposeNot-for-ProfitFor ProfitClassified by OwnershipPublicly heldPrivately held McDonalds Ford Motor Comp
5、any PepsiCo Google Salvation Army American Cancer Society Gates Foundation Cargill Inc.Chapter 12-6Separate Legal ExistenceLimited Liability of StockholdersTransferable Ownership RightsAbility to Acquire CapitalContinuous LifeGovernment RegulationsAdditional TaxesCorporate ManagementCharacteristics
6、that distinguish corporations from proprietorships and partnerships.Characteristics of a CorporationSO 1 Identify the major characteristics of a corporation.SO 1 Identify the major characteristics of a corporation.AdvantagesDisadvantagesChapter 12-7Characteristics of a CorporationSO 1 Identify the m
7、ajor characteristics of a corporation.SO 1 Identify the major characteristics of a corporation.StockholdersChairman and Board of DirectorsPresident and Chief Executive OfficerGeneral Counsel and SecretaryVice President MarketingVice President Finance/Chief Financial OfficerVice President OperationsV
8、ice President Human ResourcesTreasurerControllerIllustration 12-1 Corporation organization chartChapter 12-8File application with the Secretary of State.State grants charter.Corporation develops by-laws.Initial Steps:Forming a CorporationSO 1 Identify the major characteristics of a corporation.SO 1
9、Identify the major characteristics of a corporation.Companies generally incorporate in a state whose laws are favorable to the corporate form of business (Delaware, New Jersey).Corporations expense organization costs as incurred.Chapter 12-91.Vote in election of board of directors and on actions tha
10、t require stockholder approval.Stockholders have the right to:Ownership Rights of StockholdersSO 1 Identify the major characteristics of a corporation.SO 1 Identify the major characteristics of a corporation.2. Share the corporate earnings through receipt of dividends.Illustration 12-3Chapter 12-103
11、. Keep the same percentage ownership when new shares of stock are issued (preemptive right*).Stockholders have the right to:Ownership Rights of StockholdersSO 1 Identify the major characteristics of a corporation.SO 1 Identify the major characteristics of a corporation.* A number of companies have e
12、liminated the preemptive right.Illustration 12-3Chapter 12-114. Share in assets upon liquidation in proportion to their holdings. This is called a residual claim.Stockholders have the right to:Ownership Rights of StockholdersSO 1 Identify the major characteristics of a corporation.SO 1 Identify the
13、major characteristics of a corporation.Illustration 12-3Chapter 12-12Ownership Rights of StockholdersSO 1 Identify the major characteristics of a corporation.SO 1 Identify the major characteristics of a corporation.Class A COMMON STOCKClass A COMMON STOCKPAR VALUE $1 PER SHAREPAR VALUE $1 PER SHARES
14、tock CertificateName of corporationStockholders nameClassSharesSignature of corporate officialPrenumberedIllustration 12-4Chapter 12-13Stock Issue ConsiderationsSO 1 Identify the major characteristics of a corporation.SO 1 Identify the major characteristics of a corporation.Charter indicates the amo
15、unt of stock that a corporation is authorized to sell.Number of authorized shares is often reported in the stockholders equity section.Authorized StockChapter 12-14Stock Issue ConsiderationsSO 1 Identify the major characteristics of a corporation.SO 1 Identify the major characteristics of a corporat
16、ion.Corporation can issue common stock directly to investors or indirectly through an investment banking firm.Factors in setting price for a new issue of stock:1.the companys anticipated future earnings2. its expected dividend rate per share3. its current financial position4. the current state of the economy5. the current state of the securities marketIssuance of StockChap
