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CHAPTER 10. CORPORATIONS

Corporations. An Introduction. CHAPTER 10. CORPORATIONS. Global Scope. What you will learn in this chapter : What corporations are and how they differ from other ownership structures. The division of ownership responsibilities under corporations.

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CHAPTER 10. CORPORATIONS

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  1. Corporations An Introduction CHAPTER 10. CORPORATIONS Global Scope • What you will learn in this chapter: • What corporations are and how they differ from other ownership structures. • The division of ownership responsibilities under corporations. • The role that shareholders, both common and preferred, play in corporations. • How owner’s equity is broken down under corporations. • Accounting transactions specific to corporations. • Corporate financial ratios. The Corporate Setting

  2. Corporations vs. Sole Proprietorships Sole Proprietorships Raising Capital Having Expertise One owner assumes responsibility for all aspects of the business.

  3. Corporations vs. Partnerships Partnerships Can attract more diversity at ownership level

  4. Corporations The Next Level of Ownership Corporations A more specialized ownership structure Foundation of modern economies Accountants need to know

  5. Corporations The Corporate Structure The Corporate Ownership Structure Board of Directors Shareholders Management

  6. Corporations Why Shares Are Issued Owners want business to grow Are now a part of ownership Issue shares to the public Can still have control

  7. Corporations The Nature of Shareholder Ownership Do not run the company Shareholders Receive dividend payments Shares can be traded on the market

  8. Corporations How Shareholders Have a Say Board of Directors Shareholders elect Represent shareholders regarding major decisions Hiring Management

  9. Corporations Hiring Professional Management Board of Directors Hire Management To run day-to-day business CEO & Team

  10. Corporations The Merits of Corporate Structures The Corporate Structure Cons Pros

  11. Corporations Incorporation Pros Advantages of Incorporation • The power to raise money • Organizational structure • Managerial expertise

  12. Corporations Incorporation Cons Disadvantages of Incorporation • Red tape • Impersonal nature

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