Chapter 20 - Corporations: formation and capital stock transactions. After reading this chapter, you should be able to: Explain the characteristics of a corporation, describe special "hybrid" organizations that have some characteristics of partnerships and some characteristics of corporations, describe the different types of stock, compute the number of shares of common stock to be issued on the conversion of convertible preferred stock,. | 1- McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Corporations: Formation and Capital Stock Transactions Section 1: Forming a Corporation Chapter 20 Section Objectives Explain the characteristics of a corporation. Describe special “hybrid” organizations that have some characteristics of partnerships and some characteristics of corporations. Created by corporate charter issued by a state government. Can enter into contracts and own property. Can have few or many owners. Can be privately held or publicly held. Has shareholders who own the shares of stock. They are the owners of the corporation. Explain the characteristics of a corporation Objective 1 Advantages Disadvantages Ease of raising capital Limited liability Restricted agency Continuous existence Transferability of ownership rights Corporate income tax Governmental regulation Corporations Subchapter S corporation. Limited liability partnerships (LLP). Limited liability companies | 1- McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Corporations: Formation and Capital Stock Transactions Section 1: Forming a Corporation Chapter 20 Section Objectives Explain the characteristics of a corporation. Describe special “hybrid” organizations that have some characteristics of partnerships and some characteristics of corporations. Created by corporate charter issued by a state government. Can enter into contracts and own property. Can have few or many owners. Can be privately held or publicly held. Has shareholders who own the shares of stock. They are the owners of the corporation. Explain the characteristics of a corporation Objective 1 Advantages Disadvantages Ease of raising capital Limited liability Restricted agency Continuous existence Transferability of ownership rights Corporate income tax Governmental regulation Corporations Subchapter S corporation. Limited liability partnerships (LLP). Limited liability companies (LLCs). “Hybrid” Business Entities Hybrid entities have characteristics of partnerships and corporations. Describe special “hybrid” organizations Objective 2 After a Corporate Charter Is Issued Shareholders elect permanent directors. Directors or shareholders approve bylaws. Board selects corporate officers. Shares are issued to individuals who have paid full purchase price of the stock. Organizers elect an acting board of directors. Officers hire employees and begin operations. Corporations: Formation and Capital Stock Transactions Section 2: Types of Capital Stock Chapter 20 Section Objectives Describe the different types of stock. Compute the number of shares of common stock to be issued on the conversion of convertible preferred stock. 5. Compute dividends payable on stock. Capital Stock Authorized shares: The number of shares that can be sold. Issued shares: The number of shares that have been sold. Outstanding shares: The number of shares still in circulation. Outstanding stock
