Corporation - artificial being created by operation of law

Stockholder/Shareholder - called to te owner of a stock

Incorporators - founders of a corporation

Board of Directors - responsible for overall supervision of the firm

President(CEO)&other officers - responsible for implementing policies by board of directors

Vice presidents - responsibility as a manager in: production,finance,marketing,human resources

Kinds of Corporations:

1. Private - owned & organized for private purpose/objective

A. Stock - privately owned by individuals/non-government units, profits distributed to owners

B. Non-stock - religious sect/school is non-profit in nature, no shares of stock distributed

2. Public - government corporation for public functions

3. Close/Privately-held - family corporation or one which stock is held by a selected few and not open to
any person

4. Open/Publicly-held - the stock is listed in stock market available by purchase for any one

Kinds of Stocks:

1. As to value-

A. Par value stock - fixed value is stated in the certificate of stock & articles of incorporation.

- Minimum basis for the amount of contribution of a shareholder

B. No par value stock - without a designated value stated but can't be sold at less than P5

- allowed to fix the value at a later date so it is called "no par but with an issued
balue or stated value stock

2. As to right-

A. Common Stock/Ordinary Share - ordinary stock issued by a corporation which entitles the owner to a
pro rata dividend without any priority over other stockholders

B. Preferred Stock/Preference Share - class of stock with preferential rights or claims over the common
stock
Corporation code of the Philippines - general law by & under whose authority private corporations are
created

By-laws - rules or legal laws about corporation

Articles of incorporation - includes all the agreement of the incorporators

Pre-emptive right - purchase additional shares of stock whenever there's an increase in the authorized
capital stock of the corporation

Certificate of Stock - written acknowledgement by the corporation

Organization expenses/Pre-corporation costs - costs incurred in organizing a corporation

Brokerage firm/Stock Broker - where shares of stocks may be sold indirectly. Sometimes the investment
house/bank acts as underwriter & buys all the shares of stock. Public offerings are most often done
through the Philippine Stock Exchange

Issued shares - fully paid shares wherein a stock certificate is issued to the shareholder

Authorized shares - maximum number of stocks/shares allowed to issue

Subscribed shares - purchased shares but not fully paid yet & is subject to an installement payment
contract

Treasury shares - issued shares that are reacquired by the corporation

Outstanding shares - issued shares less treasury shares

Outstanding shares - the stocks that are still on the hands of stockholders

Share capital/Capital Stock - the shareholders' equity over the corporation

Contributed/Paid-in Capital - total contributions made by the shareholders

Paid-in Capital - total amount of assets given by stockholders in exchange for stock

Legal capital - minimum assets that can't be distributed to shareholders

- also called "minimum permanent investment"

Trust Fund Doctrine - corporate creditors have a right for satisfaction of their claims

Retained Earnings - represents accumulated profits earned or losses incurred

Issuance of Shares - once the subscription is collected in full, a certificate is issued

Subscription Receivable - debited at the subscription price & credited to decrease if collected
1. If callable within 30 days - current asset

2. If callable longer than one year - non-current asset

3. If not on call - contra shareholder's equity, decreasing the subsrcibed share capital stock

Share Premium/Paid In Capital In Excess of Par - credited for contributions in excess of the par value or
when shares are sold at a premium

2 Methods of Accounting for Stock:

1. Memorandum Entry Method

A. Authorized share is recorded through words/memorandum

B. Credit to "Share Capital"

2. Journal Entry Method

A. Authorized share is recorded by journal entry: total value of shares authorized

B. Credit to "Unissued Share Capital"

Stock and Transfer Book - corporation maintains special journals in recording business transactions

Shareholder's journal - is a register where one notes down the number of shares issued & the number of
shares transferred

Shareholder's ledger - is a subsidiary ledger containing the accounts of each shareholder

Subscriber's ledger - is a subsidiary ledger containing the accounts of each subscriber

Kinds of Stock:

1. Common Stock/Ordinary Share

A. Has the right to vote

B. Has share/dividends on the company's success & failure

2. Preferred Stock/Preference Share

A. Has priority claim over dividends & over assets

B. Less risky

C. Rate of return higher than the Ordinary Shares

D. Has a fixed rate of dividend amount

 2.1. Cumulative Preferred Stock - receive dividend every year

2.2. Participating Preferred Stock - receive pro-rata distribution on remaining dividends

Arrears - state of being behind in the discharge of obligations/ unpaid and overdue debt

Dividends - distribution of earnings/dividends out of its profitable operations

Reained Earnings - portion of net income of a corporation that is retained by the corporation

1. Ordinary Dividends - distributed periodically based on accumulated earning/retained earning

Surplus Profits - unrestricted/unappropriated earnings of the corporation

1. Cash dividends

2. Property dividends

3. Liability dividends

4. Stock dividends

2. Liuidating Dividends -