Stockholders' Equity

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Features of a corporation include separate legal entity, continuous life, and limited liability.

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Corporations differ from proprietorships and partnerships by being separate legal entities, having continuous life, and offering limited liability.

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Double taxation involves taxing both the corporation's income and the stockholders' dividends.

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Double taxation means the corporation pays taxes on its income, and stockholders pay taxes on dividends.

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The creation of a corporation begins with obtaining a charter from the state.

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Organizers, called corporate organizers, must obtain a charter from the state to create a corporation.

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Authority structure of a corporation

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Diagram illustrating the authority structure of a corporation, including roles such as Stockholders, Board of Directors, Chairperson of the Board, President, and various Vice Presidents.

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Four basic rights of stockholders

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1. Vote: Right to vote on matters that come before the stockholders. 2. Dividends: Right to receive a proportionate part of any dividends. 3. Liquidation: Right to receive a proportionate share of any assets remaining upon liquidation. 4. Preemption: Right to maintain one's proportionate ownership in the corporation.

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Definition of Stockholders' equity

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Represents the stockholders’ ownership interest in the assets of a corporation. Divided into Paid-in capital and Retained earnings.

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Components of Stockholders' equity

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1. Paid-in capital: Amount contributed by stockholders, including stock accounts and additional paid-in capital. 2. Retained earnings: Amount earned through profitable operations, reduced by dividends.

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Information found on a stock certificate

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Includes Par value, Company name, and Number of shares.

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Preferred stock gives its owners certain advantages over common stockholders.

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True. Preferred stocks are known for their benefits, such as receiving dividends first.

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Par Value

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An arbitrary amount assigned by a company to a share of its stock upon original issuance.