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الجمعة، 20 مايو 2016
Barcode Software
Barcode Software
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الثلاثاء، 17 مايو 2016
sport2
ــ 160 مليون مشاهد يتابعون نهائي الدوري الأوروبي
الثلاثاء، 17 مايو 2016 -
سيبث نهائي الدوري الأوروبي غدا الأربعاء، في مدينة بازل السويسرية بين ليفربول الإنجليزي وإشبيلية الإسباني في أكثر من 100 دولة لـ160 مليون مشاهد بكل أنحاء العالم،
بمتوسط مشاهدة مباشرة يصل إلى 50 مليون شخص. وحصل 500 صحفى و120 مصورا على الاعتمادات والتصاريح اللازمة لتغطية المباراة من داخل الملعب، بجانب 600 فني تابعين لقنوات تليفزيونية مختلفة،
وفقا لما أعلنه الاتحاد الأوروبي لكرة القدم. وستتولى قناة (إس أر إف) السويسرية مسئولية بث الإشارة وستستخدم 35 كاميرا لنقل المباراة من ضمنهم الكاميرا العنكبوتية التي تسير على كابلات علوية معلقة في نقاط مختلفة بأرض الملعب. وفي هذا النهائي سيعامل ليفربول كصاحب الأرض وإشبيلية كزائر، وإن كان كل فريق سيلعب بطاقمه الأساسي. وسيحتل الجهاز الفني لليفربول واللاعبون الاحتياطيين مقاعد الإدارة الفنية والبدلاء الواقعة بغرب الإستاد بالقرب من جماهيرهم، بينما سيكون الجانب الإسباني بالجانب الشرقي من ملعب "سانت جاكوب بارك" الذي يتسع لـ35 ألف متفرج. وستستخدم تكنولوجيا (عين الصقر) لتحديد إذا ما كانت الكرة عبرت خط المرمى أم لا، فى المباراة وهى تعد أول مرة تستخدم في بطولة ينظمها الاتحاد الأوروبي. ويستخدم هذا النظام سبع كاميرات عند كل مرمى وبرنامج لمتابعة الكرة داخل المنطقة يحدد اذا ما كانت الكرة عبرت بكامل محيطها خط المرمى وذلك لتفادي "الأهداف الشبحية". وترسل المنظمة إشارة اهتزازية وأخرى مرئية لكل حكام المباراة حال عبورها بشكل كامل لخط المرمى.
sport
ــ 31 رياضيا يواجهون خطر الاستبعاد عن أولمبياد ريو
الثلاثاء، 17 مايو 2016 -
قد يتم استبعاد 31 رياضيا عن دورة الألعاب الأولمبية فى ريو، بعد ثبوت تناولهم منشطات فى أولمبياد بكين.
أكدت اللجنة الأولمبية الدولية اليوم الثلاثاء، أن فحوصات جديدة أجريت لعينات رياضيين شاركوا فى أولمبياد بكين 2008 بينت ثبوت تناول 31 منهم منشطات، وقد يتم استبعادهم عن دورة الألعاب الأولمبية 2016 فى ريو دى جانيرو من 5 إلى أغسطس. وأوضحت اللجنة الأولمبية أن الفحوص شملت 454 عينة فى 6 رياضات بعد "عمل قامت به الوكالة العالمية لمكافحة المنشطات والاتحادات الدولية"، وأن أصحاب الحالات الـ31 ينتمون إلى 12 دولة،
مشيرة إلى أنها ستتخذ "فى الحال" الإجراءات اللازمة.
sport
نابولى يُغرى هيجواين بـ7 ملايين يورو سنويا للتجديد
الإثنين، 16 مايو 2016
بدأ نادى نابولى الإيطالى فى اتخاذ خطوات جادة نحو تجديد عقد الدولى الأرجنتينى جونزالو هيجواين مهاجم الفريق، والذى دخل تاريخ الدورى الإيطالى "الكالتشيو"، من أوسع أبوابه بعد تسجيله 36 هدفاً فى موسم واحد بالبطولة، ليحطم رقم نوردال لاعب ميلان السابق الذى أحرز 35 هدفاً فى موسم 1949 /1950. ذكرت صحيفة "لاجازيتا ديلو سبورت" الإيطالية، أن أوريليو دى لورينتيس رئيس نابولى اقترح على هداف الكالتشيو تقاضى 7 مليون يورو سنوياً فى الموسم الواحد وتجديد تعاقده حتى عام 2020 مع تخفيض قيمة الشرط الجزائى من 94 مليون يورو إلى 60 مليون يورو. جدير بالذكر أن هيجواين يرتبط بعقد مع نابولى يمتد حتى يونيو 2018.
sport
ــ 400 ألف يورو تنقل عمرو طارق نهائياً للزمالك
الثلاثاء، 17 مايو 2016 -
اتفق مسئولو نادي الزمالك مع ريال بيتيس الإسبانى على تحديد 400 ألف يورو نظير إتمام صفقة انتقال عمرو طارق من النادي الإسباني للقلعة البيضاء بشكل نهائى . وسينتقل عمرو طارق لصفوف نادي الزمالك على سبيل الإعارة لمدة موسم دون حصول النادى الإسبانى على مقابل مادى مع أحقية الزمالك فى شراء اللاعب بشكل نهائى نظير سداد 400 ألف يورو لريال بيتيس .
وسيكون الزمالك ملزم بسداد قيمة شراء عمرو طارق فى حساب ريال بيتيس قبل انتهاء فترة الإعارة دون الحاجة لتوقيع عقود جديدة حيث سيكون عمرو طارق لاعبا بشكل نهائى فى صفوف الزمالك فور إيداع المبلغ المذكور فى الحساب الخاص بالنادى الإسبانى .
إنبى يصرف 6 آلاف جنيه لكل لاعب مكافأة نصف نهائى الكأس
الثلاثاء، 17 مايو 2016 -
قرر مجلس إدارة نادى إنبي، صرف 6 آلاف جنيه لكل لاعب بالفريق البترولي، عقب التأهل لنصف نهائى كأس مصر بعد الفوز على المريخ البورسعيدي، فى المباراة التى أقيمت بين الفريقين مساء أول أمس الأحد على استاد الإسماعيلية،
ليتأهل الفريق البترولى لدور نصف نهائى البطولة.
كان إنبى قد تعادل مع المريخ البورسعيدى فى الوقت الأصلى بهدف لمثله ليحتكم الفريقين إلى وقت إضافى على مدار شوطين قد انتهى بالتعادل بهدفين لمثلهما ليحتكما إلى ركلات الترجيح التى انتهت لصالح إنبى بنتيجة 4/3.
الأربعاء، 20 أبريل 2016
technology
Bill Gates says U.S. needs limits on covert email searches
Bill Gates said on Monday that no one was an “absolutist” on either side of the digital privacy debate, but the co-founder of Microsoft Corp (MSFT.O) said he supports his company’s lawsuit against the U.S. government seeking the freedom to tell customers when federal agencies have sought their data.
"There probably are some cases where (the government) should be able to go in covertly and get information about a company’s email," Gates said at a Reuters Newsmaker event in Washington.
"But the position Microsoft is taking in this suit is that it should be extraordinary and it shouldn’t be a matter of course that there is a gag order automatically put in,” he said in an interview with Reuters Editor-in-Chief Stephen Adler.
The lawsuit, filed last week in federal court in Microsoft's home town of Seattle, argues that the government is violating the U.S. Constitution by preventing Microsoft from notifying thousands of customers about government requests for their emails and other documents, sometimes indefinitely.
The move comes as rival Apple Inc (AAPL.O) is locked in a showdown with the U.S. government over access to an iPhone belonging to one of the killers in the December shooting in San Bernardino, California.
Gates said more collaboration between law enforcement and privacy advocates would help determine which “legislative framework ... strikes the perfect balance” on government access to private data.
“I don’t think there are any absolutists who think the government should be able to get everything or the government should be able to get nothing,” Gates, 60, said.
The man who co-founded Microsoft in 1975 and is still held in reverence by the technology world made waves in February when he appeared to distance himself from Apple in its legal fight with the U.S. Federal Bureau of Investigation, but later clarified his comments and said that headlines suggesting he supported the FBI’s position were inaccurate.
Gates, the world's richest person, also talked about the work of the Bill and Melinda Gates Foundation, the philanthropic organization he formed in 2000, which has an endowment of more than $40 billion.
The foundation, where Gates works day to day, has focused attention in recent months on the Zika outbreak, which has been linked to thousands of suspected cases of microcephaly, a rare birth defect, in Brazil and is affecting large parts of Latin America and the Caribbean.
The World Health Organization declared the outbreak an international health emergency on Feb. 1. Gates said the foundation would be contributing funds to aid in the Zika fight, but did not say how much.
Private sector and governments need to work together to quickly roll out products to combat Zika and other mosquito-borne diseases, Gates said.
"Zika is a tough one," he said. "There are potential solutions. They won't come soon enough to avoid some problems in the entire hemisphere."
الثلاثاء، 19 أبريل 2016
الأربعاء، 13 أبريل 2016
UNIT COSTS
UNIT COSTS
UNIT COSTS
PROCESS COST SYSTEM
The process cost system is used by firms manufacturing identical products in a continuous mass production. As opposed to job order cost systems where unit costs are determined for separate jobs, in process cost systems, there is only one product and, therefor, only one overall unit cost. But, separate unit costs for each department reflect the manufacturing process as the product moves from department to department.
PROCESS COST INVENTORIES
Each department work in process inventory is debited for 1- the goods transferred to it and 2- the conversion costs (made of direct materials, direct labor and an apportioned factory overhead). It is credited for the goods transferred to the next department (or finished goods).
EQUIVALENT UNITS OF PRODUCTION
The number of products which could have been manufactured from start to finish by a department in a given period is known as the equivalent units of production. This number takes into account the beginning and ending inventory being made of products in different stages of production: both are converted to full or equivalent units before being added and subtracted (respectively) from actual total production of completed units.
UNIT PROCESSING COST
The unit processing cost is calculated by dividing the total processing cost assigned to the department by the equivalent units of production. This cost is further broken down into direct materials unit cost and conversion unit cost.
JOINT PRODUCT COST
When two or more products are produced simultaneously in a single manufacturing process, the joint material, labor and/or overhead must be apportioned to the different products. A common allocation method is based on the relative sales value of each product. When one of the products has a much lower value, it is called a byproduct. A byproduct is valued at net realizable value.
MANAGERIAL ACCOUNTING REPORTS
The desirable features of a managerial accounting reports are accuracy, clarity, conciseness, relevance and timeliness. Reports are not desirable if their cost exceeds any potential benefit.
GROSS PROFIT ANALYSIS
Gross profit analysis reveals whether a change in gross profit is attributable to sales volume, selling price or cost of production. The cost of production is further analyzed with variable costing or absorption costing. The purpose of the analysis is to help management make production, pricing, sales mix decisions as well as control costs.
VARIABLE COSTING
In variable costing, also known as direct costing, all the variable cost, and only variable costs, are assigned to cost of goods. A manufacturing margin (or marginal income) is derived by subtracting this variable cost from sales, and the factory overhead together with other selling and administrative expenses are deducted from it to arrive at net income. Variable costing reveals the effect of changing volume of production on net income.
Sales minus Variable costs = manufacturing margin (or marginal income)
Manufacturing margin
minus factory overhead
minus other selling and administrative expenses
--------------------------------------------------------
Net income
ABSORPTION COSTING
In absorption costing, both variable and allocated overhead costs are assigned to cost of goods sold. Variable and absorption costing are similar if goods sold and goods manufactured are equal. When they are not equal, the absorption costing method reveals the effect of changes in inventory on net income.
Statement of Cash Flows
Statement of Cash Flows
Statement of Cash Flows
THE CASH BASIS FUNDS STATEMENT
SOURCES OF CASH
1) Operating income - is usually the largest and most frequent source of cash provided a business is profitable. When revenues exceed expenses, cash flow increases. When expenses exceed revenues, cash flow decreases.
2) Issuance of capital stock or long-term debt.
3) The sale of noncurrent assets such as equipment, land, buildings, patents, etc.
CASH PROVIDED BY OPERATIONS
CONVERSION OF NET INCOME FROM A ACCRUAL BASIS TO A CASH BASIS
1) The following items should be added to net income: depreciation expenses, increases in current liabilities, decreases in current assets, and the amortization of bond discount or intangible assets.
2) The following items should be subtracted from net income: amortization of bond premium, increases in current assets, and decreases in current liabilities.
WORKING CAPITAL FUNDS STATEMENT
SOURCES OF WORKING CAPITAL
1) Operating income - when revenues exceed expenses.
2) The issuance of long-term debt.
Example: Issued a $50,000 bond due to mature in ten years.
3) The issuance of capital stock.
Example: 10,000 shares of $100 par preferred stock are sold to
shareholders for $105 a share.
4) The sale of noncurrent assets. Example: building, land, bonds,
equipment, etc.
WORKING CAPITAL FUNDS STATEMENT
USES OF WORKING CAPITAL
1) The declaration of cash dividends.
Example: The board of directors issues a declaration that all
common shareholders will receive $0.50 for each share held.
2) The retirement of long-term debt.
Example: Full payment is made to bondholders at maturity.
3) The purchase of noncurrent assets. Example: equipment, land,
buildings, etc.
WORKING CAPITAL FUNDS STATEMENT
WORKING CAPITAL IS NOT AFFECTED BY THE FOLLOWING TRANSACTIONS
1) Those that are only between current asset accounts.
Example: Cash is used to purchase inventory.
2) Those that are only between current liability accounts.
Example: A 90 day note is drawn up for a trade receivable.
3) Those that are only between current asset and current
liability accounts.
Example: A cash payment is made to reduce accounts payable.
MANAGERIAL ACCOUNTING
MANAGERIAL ACCOUNTING
MANAGERIAL ACCOUNTING
FINANCIAL VS. MANAGERIAL ACCOUNTING
Accounting information is usually divided into two types: 1) financial and 2) managerial. Financial information (i.e. balance sheet and income statement) is prepared periodically, and is primarily intended for outsiders of the firm. Financial information is also useful to management in directing the current operations of a business and planning. Managerial accounting provides additional both historical and estimated data, which is intend specifically for management to run current operations and to plan for the future. The information generated is far more extensive than in financial accounting, and the reports are based on management's needs.
THE MANAGEMENT PROCESS
Managerial accounting gives management the information to perform the functions of control and planning. The control function is concerned with the process of directing the operations of an enterprise to achieve its goals. Planning is concerned with developing and setting goals for the use of company resources and formulating methods to achieve these goals. Control and planning decisions are the responsibility of management. The controller of a company gives advice but assumes no responsibility for managerial decisions. Results of management decisions are continuously compared to the goals, and the goals themselves are periodically revised.
INTRODUCTION TO RESPONSIBILITY ACCOUNTING
When all major planning and operating decisions are made by one or a few individuals of a business, it is considered to be a centralized organization. The larger a business becomes, the more difficult it is to remain centralized. When an organization becomes decentralized, it is divided into separate units. Each of these units is delegated responsibilities for planning and control. Managers are not required to seek approval from upper management for normal operating decision. The level of decentralization varies greatly among companies because each one has specific and unique circumstances. Managerial accountants assist managers of decentralized organizations.
DECENTRALIZED OPERATIONS
Decentralized operations are usually classified according to the scope of responsibility assigned and the decision making authority delegated to managers. The three types of decentralized operations are: 1) cost center, 2) profit center, and 3) investment center.
COST CENTERS
A budget is the tool used for planning and controlling costs. It represents a written statement of management's plans for the future in financial terms. Budget performance reports are prepared to compare actual results with budgeted figures. It is the management's responsibility to investigate variances, determine their cause, and suggest improvements. Often there are good explanations for these variances, and variances do not necessarily reflect poor management.
PROFIT CENTERS
Managers of profit centers are responsible for expenses and revenues. The income statement is usually the report used to evaluate performance. Income statements for profit centers can emphasize either gross profit or operating income, in addition to showing revenues and expenses of that department. Difficulties arise when expenses are apportioned among departments. Some expenses (period costs and indirect costs) reported on departmental income statements are assigned based on subjective criteria, and the method of allocation is often questionable. Direct costs are under the direct control of the department. Indirect costs are company wide and are referred to as overhead.
INVESTMENT CENTERS
Investment center managers are responsible for revenues, expenses, and invested assets. Results can be measured by evaluating operating income, rate of return on investment, and residual income. Because operating income only represents revenues and expenses with no consideration for the amount of invested assets, it does not portray a clear picture of profitability. The rate of return on investment and residual income offer more informative approaches.
FINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSIS
FINANCIAL STATEMENT ANALYSIS
INTRO TO FINANCIAL STATEMENT ANALYSIS
Financial statement analysis provides information to those interested in the financial condition and operating results of a company. When financial statement items are considered individually, they usually will have a limited significance. A better perspective is gained when comparisons are made with previous statements, other businesses and industry averages. The main purpose of conducting financial analysis is to measure profitability and solvency. A business which is not able to make interest payments will experience difficulty in obtaining credit. This could lead either to reduced profitability or bankruptcy. A company with lower than average earnings may also find credit harder and more expensive to obtain.
ANALYTICAL PROCEDURES
Most analytical measures are expressed as percentages or ratios. This allows easy comparison with other businesses regardless of size. Horizontal and vertical analyses express entire financial statements in percentages. The horizontal analysis is an analysis of the rate of change in items of financial statements form year to year. The vertical (or common size) analysis presents each item as a percentage of total assets for the balance sheet and sales for income statement. When using these analytical measures, one should take the following factors into consideration: 1) industry trends, 2) changes in price levels, and 3) future economic conditions.
CURRENT POSITION ANALYSIS
A current position analysis is used to measure the ability of a firm to meet its current (and non-current) obligations. Three popular methods of analysis are: 1) determining working capital, 2) current ratio, and 3) quick ratio. The primary users of current position analysis are creditors. Working capital information is less meaningful than current or quick ratios. These ratios must be compared with other firms in the same industry to see if they are in line.
ACCOUNTS RECEIVABLE ANALYSIS
An accounts receivable analysis is used to measure a firm's solvency. The size and composition of accounts receivable is under continuous change, and therefore must be watched closely. Since funds tied up in accounts receivable yield no benefits or interest, it is best to keep this balance to a minimum. The quicker a firm is able to turn-over its accounts receivable, the lesser the risk of loss from uncollectible accounts. In addition, the firm has the option to put these funds into more productive uses.
ACCOUNTS RECEIVABLE ANALYSIS
Two commonly used methods to analyze accounts receivable are
1) accounts receivable turnover, and
2) number of days' sales in receivables (or days sales outstanding).
Both methods measure a firm's ability to generate sales and quickly collect its accounts receivable. A lower number of days' sales in receivables indicates a firm is collecting receivables quicker. Both of these measures must be compared with other firms in the same industry.
INVENTORY ANALYSIS
A business should maintain an adequate inventory balance to meet demands of its operations, but at the same time keep this balance to a minimum. When a firm has excess inventory, it will have higher operating expenses, reduced solvency, increased risks of losses due to price declines and obsolescence, and, in addition, it limits its chances to take advantage of more favorable investment opportunities. Two measures commonly used to assess inventory management efficiency are
1- inventory turnover ratios and
2- the number of days' sales in inventory.
These figures must be compared with industry averages to properly evaluate inventory management.
SOLVENCY ANALYSIS - LONG-TERM LIABILITIES
The following methods are commonly used to evaluate the safety of long-term creditors:
1) ratio of shareholders' equity to liabilities (debt-to-equity),
2) ratio of plant assets to long-term liabilities,
3) operating income divided by interest expense, as well as other payments (known as times-interest-earned or coverage ratios).
For all these methods of analysis, the higher the number, the greater the amount of safety. This information is used by investors, creditors, shareholders and management. It indicates the ability of a firm to meet its financial obligations.
PROFITABILITY ANALYSIS
Profitability analysis measures the ability to generate income. Common measures used are
1) profit margin: sales divided by net income,
2) total assets turnover: ratio of net sales to total assets,
3) return on assets: net income divided by total assets,
4) return on equity: net income divided by either shareholders' total equity or common stock only,
5) earnings per share of common stock,
6) dividends per share of common stock.
In addition, investors also use price-earnings ratio, and dividend yield. All these ratios are most useful to those interest in the future ability to prosper, that is the shareholders and other investors, as well as management.
REVIEW OF ANALYTICAL MEASURES
Analytical measures are used to assess solvency and profitability. The type of analytical measure chosen usually is dependent on the following factors: 1) the size of the company, 2) its capital structure, and 3) the type of business activity. Analytical measures are useful for evaluating the financial results of a business and the performance of management. They are also used to predict future performance.
CORPORATE ANNUAL REPORTS
Corporate annual reports contain information that summarizes the activities of the past year, and the future plans of the company. No standard or required format exists. However, annual reports must by law provide accurate financial statements. Most annual reports contain the following sections:
1) financial highlights,
2) management report,
3) president's letter,
4) an independent auditors' opinion, and
5) historical data.
COST VOLUME PROFIT RELATIONSHIPS
COST VOLUME PROFIT RELATIONSHIPS
COST VOLUME PROFIT RELATIONSHIPS
COST-VOLUME-PROFIT RELATIONSHIPS
Cost-volume-profit analysis examines the interrelationships between costs, revenues, selling prices, revenues, production volume and profits. Cost-volume-profit analysis is based on data provided by accounting. Total costs are separated into
1- variable costs which change with production level,
2- fixed costs which do not change with production level, and
3- mixed costs which are partly fixed and partly variable.
BREAK-EVEN ANALYSIS
At a break-even point, a business has neither profit nor loss. Break-even analysis is often used to predict and plan for the future. The break-even point is given by the quantity for which
REVENUES = FIXED COSTS + VARIABLE COSTS
where revenues and variable costs are estimated for various levels of production. A graphical representation shows that as fixed and variable costs increase, so does the break-even point. The break-even formula is modified to required a given profit.
BREAK-EVEN CHART
Break-even charts are used to help in understanding the relationships between sales, costs, and operating profits or losses. The capacity stated in percentage form is represented on the horizontal axis of the chart. Revenue and costs are represented on the vertical axis. The total costs line begins at a point on the vertical axis. This point is equal to total fixed costs. The sales line begins at zero. When the sales and total costs lines intersect, the break-even point has been reached.
PROFIT-VOLUME CHART
The profit-volume chart focuses on the profitability of a company. The vertical axis represents the maximum operating profit and the maximum operating loss that can be realized when capacity ranges from zero to 100%. The horizontal axis contains different levels of manufacturing capacity. Only one line is used by the profit-volume chart. This profit line begins at a negative point on the vertical axis which is equal to total fixed costs.
PROFIT-VOLUME CHART
When the profit line crosses the horizontal axis, a break-even point has been established. This break-even point is stated in terms of a productive capacity. The profit-volume chart can be used to measure the effects of changes in unit selling prices, total fixed costs, and unit variable costs. Each time such a change occurs, the profit-volume chart is revised.
SALES MIX
The sales mix must be taken into consideration because products have different selling prices, unit variable costs, and therefore profit margins. Starting with the proportion of each product in total revenue, each product selling price and cost, the contribution of each product to profits is determined. This information is incorporated on an increment basis product by product into the break-even analysis.
MARGIN OF SAFETY
The margin of safety is measured as either a sales dollar volume or a ratio. The margin of safety in terms of sales dollar volume is calculated by subtracting break-even sales from current sales. The margin of safety as a ratio is calculated by dividing the dollar volume sales safety margin by current sales. When the margin of safety is low, management must exercise caution because a small decline in sales revenue could lead to an operating loss.
CONTRIBUTION MARGIN RATIO
The contribution margin ratio is computed by subtracting variable expenses from sales and dividing the results by sales. The contribution margin ratio provides useful information on a firm's profit potential and the relationships between costs, profits, and volume. Contribution margins are often used to set business policies. Firms with large contribution margins and excessive productive capacity often concentrate their efforts on increasing production and sales volume.
CORPORATIONS
CORPORATIONS
CORPORATIONS
INTRODUCTION TO CORPORATIONS
A corporation is an legal entity created by state law. It has a distinct and separate existence from the individuals who created it, and those who control its operations. Corporations are commonly classified as profit or nonprofit, and public or nonpublic. A profit corporation's survival depends upon its ability to make profits. A not-for-profit corporation relies on donations and grants. Public corporations issue stock that is widely held and traded. Shares of a nonpublic corporation are usually held by a small number of individuals. Regardless of the form or purpose of corporations, all must be created according to either state or federal statutes.
CHARACTERISTICS OF A CORPORATION
A corporation has the ability to enter into contracts, incur liabilities, and buy, sell, or own assets in its corporate name. These provisions can be found in the charter or articles of incorporation. Ownership of a corporation is divided into shares of stock. Stocks can be issued in different classes. All shares of stock in the same class have identical rights and privileges. The buying and selling of shares does not effect the business activities of the corporation. Shareholders' liability is limited to the amount they invested.
CHARACTERISTICS OF A CORPORATION
The corporation is subject to considerable more regulation than other forms of business organization. Corporations are also subject to greater taxes. Earnings are taxed before they are distributed to shareholders, and again when shareholders report them on their individual tax returns. The IRS does under certain conditions allow a corporation to be taxed in a manner similar to a partnership, provided it has a small number of shareholders. All corporations are subject to federal income taxes. The payment of state income taxes depends upon where the corporation was incorporated and in which states it conducts business.
ORGANIZATION OF A CORPORATION ORGANIZATIONAL STRUCTURE OF A CORPORATION
1) Shareholders of a corporation elect the board of directors.
2) The board of directors are responsible for determining corporate policies and electing officers.
3) Officers are responsible for operations and hiring employees. When shareholders are not pleased with the performance of the board of directors, they can elect new directors.
ADVANTAGES/DISADVANTAGES OF CORPORATIONS
The major advantages of corporations as a form of business are:
1- limited liability of shareholders,
2- large capital formation,
3- ease of transfer of ownership,
4- continuity of existence.
The disadvantages of corporations are:
1- double taxation of profits,
2- possible conflicts between management and shareholders,
3- government regulations.
SHAREHOLDERS' EQUITY
The shareholders' equity (that is, owners' equity of a corporation) consists of primarily paid-in capital and retained earnings. Paid-in capital represents the funds paid for shares of stock. When more than one class of stock is issued, separate paid-in capital accounts are maintained. The retained earnings account should normally have a credit balance, and it represents past net income that has been accumulated by the corporation. Dividends are paid out of retained earnings resulting in debit to retained earnings account. If the retained earnings account balance is itself a debit, a deficit has been incurred by the corporation, i.e. losses in excess of profits.
CHARACTERISTICS OF STOCK
The number of shares of stock a corporation may issue is stated in the articles of incorporation. Shares can be issued with or without par. A par value does not reflect the true value of the stock, it is merely an arbitrary monetary figure. The par value of a stock can be found on the stock certificate which also serves as evidence of ownership. Most states require that a stock be assigned a stated value. It is the responsibility of the board of directors to either assign a par or stated value to shares of stock.
CHARACTERISTICS OF STOCKS
Shares of ownership in a corporation are capital stock. Shares owned by shareholders are referred to as stock outstanding. The creditors of a corporation have no legal claim against shareholders. The law requires, however, that a specific minimum contribution of shareholders be held by the corporation as protection for creditors. The percentage is determined by state laws, and is known as legal capital. The percentage of investment held as legal capital tends to be low, similar to the par or stated value of the stock.
CLASSES OF STOCK
All shareholders of a corporation are entitled to basic rights. These rights differ according to classes of stock. Common stock possesses most of the voting powers, while preferred stock has preferential rights to a share in the distribution of earnings, and often has first claim to assets in the event of liquidation. Each common stoch shareholder also has a preemptive right to any new issue. The specific rights of a stock are found in either the charter or the stock certificate. The board of directors decides if earnings should be distributed to shareholders as dividends. Distribution of dividends is not guaranteed, and the decision is usually based upon the needs of a corporation.
TYPES OF PREFERRED STOCK
Preferred shareholders are assured of receiving dividends before any common shareholder. When preferred stock is participating, preferred shareholders can share in excess profits with common shareholders. Nonparticipating preferred stock is limited to a fixed dividend. When a preferred stock is cumulative, the preferred shareholder is entitled to all dividend payments in arrears before any common shareholder can be paid a dividend. A preferred stock that is both cumulative and participating is the most attractive to investors.
ISSUANCE OF STOCK
The entries to record investments of shareholders are similar to most other forms of business. A cash or an asset account is debited, and a capital account is credited. A corporation must keep detailed records of shareholders investments if it plans to pay the correct amount of dividends to the appropriate individuals. It also uses these records to sent shareholders financial reports and proxy forms. When corporations issue stock, it rarely sells at its par value. The price of a stock is influenced by many factors.
PREMIUMS AND DISCOUNTS ON STOCK
When stock is issued at a higher value than par, a premium on stock account is credited. If a stock is issued below par, a discount on stock account is debited. Under certain circumstances, a corporation may decide to return a premium as a dividend at a later date. When a stock is issued at a discount, shareholders may be liable up to the amount of the discount in the event of a liquidation. The discount on capital account is classified as a contra paid-in capital account, and is subtracted from other capital accounts when determining the total shareholders' equity.
STOCK SUBSCRIPTION
When a corporation does not want to sell its own shares, it can sell its stock to an underwriter who resells it at a higher price to earn a profit. The advantages of issuing stock through an underwriter are that it relieves a company from marketing tasks, and the company may even receive funds before shares are sold. Stock can be subscribed at par, below par, or above par.
STOCK SUBSCRIPTION
When a company sells its stock directly to investors, a Stock Subscription Receivable account is debited for each sale. A Stock Subscribed account is credited upon the initial offering of the subscription. When a subscription has been paid in full, Stock Subsdcribed account is debited and the appropriate stock account credited. At the same time the stock certificates are issued to shareholders. To keep track of subscription payments a subscribers ledger shows individual accounts. Paper stock certificates are currently phased out and replaced by computerized entries.
TREASURY STOCK
Treasury stock represents stock that has been issued, subscribed in the past, and later repurchased from shareholders. Motives for repurchasing shares may be to provide employees with stock bonuses, use these stocks for employee savings plans, or to boost the market value of the stock. If treasury stock is reissued or cancelled, it is no longer treasury stock. The accounting method most commonly employed to record the purchase and sale of treasury stock is the cost basis. The purchase or sale price is used to record the entry with no consideration given to par value or original issue price. When the stock is resold a Paid-In Capital from Sale of Treasury Stock account is used to record any premiums or discounts on sales.
EQUITY PER SHARE
Equity per share represents the book value of a share (not its market value). Equity per share is calculated by dividing total shareholders' equity by the number of shares outstanding. In the event more than one type of stock has been issued, the equity must be allocated among the different types. The presence of preferred stock reduces the amount of equity available to common stock shareholders. The equity per share has an insignificant influence on the market price of a stock: earnings per share, dividend payments, and future expectations are far more influential.
ORGANIZATION COSTS
Any expenditure incurred when the corporation is formed, is charged to the Organization Costs account. This account is an intangible asset that has no value in the event the corporation is liquidated. The Internal Revenue Code allows Organization Costs to be amortized, but this must be done within five years. Organization Costs are usually not large, and their amortization has little effect on net income.
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