1.

Corporation- an artificial being created by operation of law, having the right of succession and
the powers, attributes and properties expressly authorized by law or incident to its existence.
2. Corporation formed through an operation of law and not by mere agreement between the
owners.
3. Shareholders equity- the residual interest in the asset of a corporation after deducting all its
liabilities.
4. Accounting for Share Capital
 Memorandum Method – commonly used.
 Journal Entry Method
5. Authorized share capital- represents the maximum number of shares fixed in the entity’s
authorized articles of incorporation that can be subscribed and issued to shareholders.
6. Unissued share capital- represents the portion of the authorized share capital not yet issued and
is still available for subscription and issuance.
7. Ordinary Share- represent the residual corporate interest that bears the ultimate risk of loss and
receives the benefits of success.
8. Preference shares- are shares that give the holders thereof certain preference over other
shareholders.
9. Share Premium- arises from various sources:
 Excess of subscription price over par value or stated value.
 Excess of reissuance price over cost of treasury shares issued.
 Distribution of small stock dividends.
10. Par value- is one with a peso value fixed in the articles of incorporation.
11. Legal Capital- portion of contributed capital that cannot be distributed to the owners during the
lifetime of the corporation unless the corporation is dissolved and all its liabilities are settled
first.
12. Treasury Shares- are an entity’s own shares that were previously issued but are subsequently
reacquired but not retired.
13. Stock Rights- issued without consideration are recorded though memo entry.
14. Cash and non-cash assets received as donations from shareholders are credited to share
premium.
15. Donated Shares are initially recorded through memo entry and are recognized only upon their
reissuance.