TAILIEUCHUNG - Lecture Accounting: What the numbers mean (5/e) - Chapter 8: Accounting for and presentation of owner’ equity
After studying this chapter, you should understand: The characteristics of common stock, and how common stock is presented in the balance sheet; what preferred stock is, what its advantages and disadvantages to the corporation are, and how it is presented in the balance sheet; the accounting for a cash dividend, and the dates involved in dividend transactions;. | CHAPTER 8 ACCOUNTING FOR AND PRESENTATION OF OWNER’ EQUITY McGraw-Hill/Irwin ©The McGraw-Hill Companies, Inc., 2002 Learning Objectives What are the characteristics of common stock, and how is common stock presented in the balance sheet? What is preferred stock, what are its advantages and disadvantages to the corporation, and how is it presented on the balance sheet? How are cash dividends accounted for, and what are the dates involved in dividend transactions? McGraw-Hill/Irwin ©The McGraw-Hill Companies, Inc., 2002 Learning Objectives What are stock dividends and stock splits, and why are they used? What are the components of “other comprehensive income,” and why do these items appear in owners’ equity? What is treasury stock, why is it acquired, and how do treasury stock transactions affect owners’ equity? How are owners’ equity transactions for the year reported in the financial statements? McGraw-Hill/Irwin ©The McGraw-Hill Companies, Inc., 2002 Learning Objective 1 What are the characteristics of common stock, and how is common stock presented in the balance sheet? McGraw-Hill/Irwin ©The McGraw-Hill Companies, Inc., 2002 Owners’ Equity The claim of the entity’s owners to the assets shown in the balance sheet Also called net assets Owner’s equity for a individual proprietorship is called proprietor’s capital Owners’ equity of a partnerships is called partners’ capital Owners’ equity for a corporation consists of paid-in capital and retained earnings McGraw-Hill/Irwin ©The McGraw-Hill Companies, Inc., 2002 Paid-In Capital Referred to as contributed capital Consists of: Common stock Preferred stock Additional paid-in capital McGraw-Hill/Irwin ©The McGraw-Hill Companies, Inc., 2002 Common Stock Also called capital stock The ultimate owners of the corporation Have claim to all assets after all liabilities and preferred stock claims have been satisfied Have the right and obligation to elect members of the corporation’s board of directors McGraw-Hill/Irwin ©The .
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