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Introduction
Why do so many businesses choose a corporate form of organization? In this Unit we will explore the advantages and disadvantages to corporate organization. We will also learn about the different types of stock ownership.
Reading Assignment
Principles of Accounting, Chapter 14: Corporate Equity Accounting: http://www.principlesofaccounting.com/chapter-14/
Please review this chapter’s “Objectives” and “Key Terms” before and after reading. After you complete the reading, be sure to take this chapter’s “Fill in the Blanks” and “Multiple Choice” Self-Quizzes.
In Chapter 14, the advantages and disadvantages of corporate organization are discussed. In addition, the chapter discusses the difference between the rights of stockholders of common stock, versus the rights of stockholders who own shares of preferred stock.
Written Assignment
For this assignment, identify and match the terms to the description listed in the tabular column. Also list advantages and disadvantages for each of these terms using suitable example/s:
Description
Terms
Advantage / disadvantage
The ability of a company to raise capital by issuing shares to the public.
Ability of an existing shareholder to sell shares without corporate approval
The ability of the government to tax corporate earnings and dividends.
Periodic regulatory filings
The ability of different individuals to pool resources
The inability of creditors to pursue individual shareholders
The life of the entity can exceed the life of the shareholders
Terms:
Limited Liability
Double Taxation
Perpetual Existence
Transferability of Ownership
Mutual Ownership
Cost of Regulation
Publicly Traded
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