Learning Objectives
By the end of this section, you will be able to:
- Describe and illustrate business organizational characteristics that have accounting implications.
- Describe the distinguishing characteristics of a sole proprietorship.
- Describe the distinguishing characteristics of a partnership.
- Prepare journal entries to record the investments of partners, the distribution of net income or loss to the partners, and the liquidation of the partnership.
- Prepare journal entries to record the withdrawal, either voluntarily or by death, of a partner from the partnership.
- Prepare journal entries to reflect the admission of a new partner to the partnership.
- Describe a “corporation” and explain how corporate management is structured.
- List the advantages and disadvantages of being organized as a corporation.
- Describe the rights possessed by common stockholders.
- List and explain the steps followed in organizing a new corporation
- Prepare journal entries to record issuing common stock
- Define treasury stock and prepare journal entries to record the acquisition and sale of treasury stock.
- Describe the major basic rights of common stockholders and compare them to those of preferred stockholders.
- Describe the characteristics of preferred stock
- Prepare a journal entry to issue preferred stock.
- Prepare the stockholders’ equity section of the balance sheet.
- Define par value, stated value, market value.
- Distinguish between authorized, issued and outstanding shares.
- Describe and illustrate the accounting for organizational costs.