Acc/423 Week 1

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Week One Student Guide

In Week One, you will learn about the stockholders equity section of the financial statements for the corporate form of organization. Stockholders equity is essential because it represents the capital contributed by owners of the corporation. This week you will also learn how to account for dilutive securities and how they affect earnings per share. Dilutive securities are important because they can convert to common stock in certain circumstances.

The importance of these topics is best represented by the accounting equation. For each dollar in assets, there are either creditors (liabilities) or owners (equity) who have legal claim. For the sole proprietorship and partnership organizational forms, the ownership portion of the accounting equation is fairly simple. In the corporate form, however, ownership is by stockholders and is represented primarily through common and preferred stock.

Owners Equity and Earnings per Share

OBJECTIVE: Distinguish between paid-in and earned capital.
OBJECTIVE: Record journal entries related to common, preferred, and treasury stock. OBJECTIVE: Record journal entries related to the various types of dividends

Resources: Ch. 15 of Intermediate Accounting

Content

• Ch. 15: Stockholders Equity

o The Corporate Form of Organization
o Corporate Capital
o Preferred Stock
o Dividend Policy
o Presentation and Analysis of Stockholders Equity

• Ch.16: Dilutive Securities and Earnings per Share

o Dilutive Securities and Compensation Plans
o Computing Earnings per Share

OBJECTIVE: Calculate basic and diluted earnings per share.
OBJECTIVE: Evaluate the various accounting treatments for stock compensation.

Resources: Ch.16 of Intermediate Accounting

Content

• Ch. 16: Dilutive Securities and Earnings per Share

o Dilutive Securities and Compensation Plans
o Computing Earnings per Share
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