ch 12 and 13 Flashcards
what is in a good partnership agreement
amounts to be invested, limits on withdrawals, distributions of income and loses, and admision and withdrawal of partners
what are the characteristics of an LLC
moderately complex to form limited legal liablity not taxable unlimited life moderate ability to raise capital1
with what is an LLC formed
an operating agreement
member-managed LLC
individual members can legally bind the LLC
manager-managed LLC
only authorized members may legally bind the LLC, so certain members may participate in the income without managing the company
what are the characterstics of a corporation
separate legal entity continuous life and transferability of ownership ability to raise capital limited liability dividends double taxation
what does separate legal entity mean for a corporation
it can own property in its name, can incur its own liabilities and sell stock
what does continuous life and transferability of ownership mean for a corporation
stockholders own the stock of a corporation, they can buy and sell stock without affecting the corporations operations
what is a public corporation
a corporation whose shares of stock are traded in pubilc markets
what is a private or nonpublic corporation
corporations whose shares of stock are not traded publicly and are usually owned by a small group of investors
what is the structure of a corporation
stockholders
board of directors
officers
employees
how do you form a corporation
- file an application of incorporation with the state
- state grants a charter (articles of incorporation) which formally create the corporatioon
- corporate management and board of directors prepare a set of bylaws whch are the rules and procedures for the corporation’s affairs
what happens to owners equity of the balance sheet for acorporation
it is replaced by stockholder’s equity
how is stockholder’s equity different from owner’s equity
SE has retained earnings, paid in capital, and divdend
what is paid in capital
capital contributed to the corporation by the stockholder
what is retained earnings
net income retained in the business
what rights do stockholders have
the right to vote in matters concerning the corporation
the right to share in distributions of earnings
the right to share in assets upon liquidation
what is common stock
the type of stock that is issued when only one class of stock is issued, each share has equal rights
what is preferred stock
class of stock w preference rights such as a preference to dividends
what is par value stock
a dollar amount assigned to each share of stock
what is no par stock
stock issued without par value
what is no par stock w stated value
in some states, the board of directors is required to assign some value to no-par stock
what is cumulative preferred stock
stock that has a right to recieve regular dividends that were not paid in prior years
in arrears
cumulative prefered stock dividends that have not been paid in prior years
