Corporations sometimes finance a large portion of their operations by issuing equity in the form of shares. This chapter discusses in detail the nature of the corporate form of organization, the different types of shares used to obtain funds for business activities, and how these transactions are recorded. It also expands on the concept of dividends.
Learning Objectives
LO1 – Identify and explain characteristics of the corporate form of organization and classes of shares.
LO2 – Evaluate relative financing effects of bonds, common shares, and preferred shares.
LO3 – Record and disclose preferred and common share transactions including share splits.
LO4 – Record and disclose cash dividends.
LO5 – Calculate and explain the book value per share ratio.
LO6 – (Appendix 1) Record and disclose share dividends.
LO7 – (Appendix 2) Explain and record restrictions on retained earnings.
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