This lesson will explore the corporate form of business in more detail. A corporation is a business formation that completely separates the owners from the business entity. The corporation functions in all matters as its own being, with the right to conduct business as a "person." It is important to understand a corporation's advantages and disadvantages, structure, legal rights, ability to raise capital, relationship to its owners, and relationship to its creditors.
This lesson will also expand upon stockholders’ equity accounts. In this lesson, you will learn the difference between common stock and preferred stock and record the entries to issue both types of stock. You will also learn why a company purchases shares of treasury stock and how to record transactions related to treasury stock. Treasury stock is previously issued stock that has been repurchased by the company.
Finally, you will identify the components of the statement of cash flows and learn how to prepare a statement of cash flows. The statement of cash flows is one of the four financial statements that you are required to prepare. This statement was briefly mentioned in Lesson 1. The statement of cash flows provides data related to all of a corporation's cash inflows and outflows for a period of time.
After completing this lesson, you should be able to do the following things:
By the end of this lesson, make sure you have completed the readings and activities found in the Lesson 8 Course Schedule.