Question

In this discussion question you will describe the accounting for corporations:

What are the unique accounts used in accounting for corporation versus a sole proprietorship or partnership? What role does par value and paid in capital in excess of par play in the recording of stock transactions? What does par value actually signify? What are the different types of stock accounts? What are dividends and retained earnings? What are the different types of dividends and how do they affect the owners of the company?

Answer 1

In corporation accounting capital has to be bought in form of shares i.e share capital in carison to sole propritorshi[p and partnership, we pay Dividends to our shareholders in corporation, but we draw funds through Drawings account in partnership and Proprietorship

The excess of the par value and Paid in capital is to be credite to securities premium account.

Par value signify the face value of the shares

There are 2 types of Stock Account 1) Equity stock Account 2) Preference stock account

Dividends are earning which is distributed to the shareholders as return for investing capital into the business

Retained earning are the profit which is earned by the company after paying taxes and Dividend which a company earns during its lifetime.

There are 2 types of dividend 1) Proposed Dividend 2) Interim Dividend

Dividend is the return to the shareholders for bringing capital into the business. It directly affects the shareholders. because it is the income of Shareholders amd shareholders income gets affected due to dividends