Chapter 8 Accounting

________: easiest to set up and inexpensive

all profits and losses go to owner

unlimited liability - personal liability

less regulations than corporations

organization managed by owner

pass through organization for tax purposes

business ceases with the death or departure of the owner

to transfer ownership, someone must purchase the entire business

• sole proprietorship

• corporation

• partnership

_________: fairly easy setup and inexpensive

access to more capital than sole proprietor

agreements are put in place regarding profit sharing and liability (partner agreement)

personally liable

organization managed by owners

pass through organization for tax purposes

business terminates with the departure of the owners

transferring ownership can be difficult.

• sole proprietorship

• partnership

• corporation

__________:

owners are called stockholders

owners have limited liability

more costly and complex

heavily regulated

may be either public or closely held (private)

has access to more capital than a sole proprietor or partnership

• sole proprietorship

• partnership

• corporation

Corporation: unlike proprietorships and partnerships, corporations pay taxes based on criteria set forth by the IRS.

• True

• false

_______________: the corporation pay taxes on the income it earns and the owners pay taxes on dividends received from the corporation

• taxation

• double taxation

• corporation

• partnership

_________________ contributions

a. accounts paid into the business from the owners or stockholders

• owner/investor

• earned capital

____________________/Retained Earnings

a. Accumulated net income from operating the business that is not distributed to the owners/stockholders

• owner/investors

• earned capital

____________________________

first time a corporation offers stock to the public

typically large gains for investors

• Initial public offer

• market value

• authorized shares

• issued shares

________________________

amount investors are willing to pay for a share of stock

• market value

• par value

• paid in capital

• state value

_________________________

the assigned value of the stock issued by company

represents the minimum amount of assets a company must retain

has little relevance

if stock does not have an assigned value = no par stock

• assigned value

• par value/stated value

• market value