會計專業(yè)英語Chapter7Owner’sEquityAbusinessentitycouldbesoleproprietorshippartnershipcorporation.7.1FormsofBusinessEntityAsoleproprietorship,alsoknownasasoletraderoraproprietorship,isatypeofbusinessentitythatisownedandranbyoneperson.Thereisnolegaldistinctionbetweenitsownerandthebusiness.7.1.1SoleProprietorshipAdvantagesofasoleproprietorship(1)Itiseasytocreate.Whencreateasoleproprietorship,thereisnoneedtonegotiatewithothersortobeagreedbythemandthereisnoneedoftoomuchregisteredcapitaleither.(2)Thefixedcosttomaintainasoleproprietorshipisrelativelylow.(3)Noneedtopaycorporateincometax.Disadvantagesofasoleproprietorship(1)Theownertakesunlimitedresponsibilityforallitslossesanddebtsandthenbearsabigrisk.(2)Theexistenceofasoleproprietorshipisinfluencedbythelifeofitsowner.(3)ItishardtogainalotofmoneyfordailyoperatingApartnershipisanarrangementwheretwoormoreparties,knownaspartners,agreetocooperatetoadvancetheirmutualinterests.Partnersinapartnershipmaybeindividuals,firms,profit-makingorganizations,schools,governmentofficesortheircombinations.Apartnershipmayissueandholdingequityorbegovernedonlybyacontract.Itcanbesubdividedintoordinarypartnershipandlimitedliabilitypartnership.7.1.2PartnershipAcorporationcanbedefinedasan“artificialperson”,whichisinvisible,intangibleandcreatedbylawwithanindependentlegalpersonalityandaperpetualexistence.Corporationisthemainformofmoderncompaniesanditstwotypicalsubcategoriesarelimitedliabilitycorporationsandincorporatedcorporations.7.1.3CorporationAdvantagesofcorporations(1)Limitedlegalliabilityforthecorporation.(2)Easytofinance.(3)Sharesofstockarereadilytransferable.(4)Managementisspecialized.Disadvantagesofcorporations(1)Heaviertaxation.(2)Greaterregulation.Owner’sequityistheresidualinterestintheassetsofanentityafterreducingitsliability.Stockholders’equityisnormallythetermusedtopresentowners’equityforabusinessorganizedintheformofacorporation.Equitypresentsonlyresidualclaimstonetassets,afterallliabilitieshavebeenfullysatisfied.7.2Owner’sEquityofCorporationsShareholdersaretheownerofacompany.Theownershipofacorporationcanbedividedintocapitalstock，capitalreserveandretainedearnings.Capitalstockistheamountofsharesauthorizedforissuancebythecorporation’scharter,includingbothcommonstockandpreferredstock.Theinterestofstockholderisdeterminedbythenumberofsharesheldbyhimorher.7.2.1RightsofShareholdersThebasicrightsofcommonstock:(1)Votingright(2)Firstrefusalright(3)DividendandliquidationparticipationrightPaid-incapitalistheamountofshareholderspaidtothecorporationinexchangeforshareofownership.Paid-incapitalcoversbothcapitalstockandadditionalpaid-incapital.Capitalstockarethetotalparvalueofoutstandingstocks.7.2.2Paid-inCapitalCapitalstockcanbefurtherdividedintocommonstockandpreferredstock.Thebasicrightsofpreferredstock:(1)Preferencetodividends(2)PreferencetoassetsRetainedearningsarenetincomethatacompanyretainsinthebusiness.Thebalanceofretainedearningsispartofthestockholders’claimonthetotalassetsofthecorporation.7.2.3RetainedEarningsAdividendisadistributionbyacorporationtoitsstockholdersonaproratabasis.Inpractice,thetwopredominatingformsofdividendsarecashdividendandstockdividend.Cashdividendsisaproratadistributionofcashtostockholders.Stockdividendsisadistributionofthecorporation’sownstocktostockholders.7.2.4DividendsKeyterminologiessoleproprietorship獨資企業(yè)partnership合伙企業(yè)corporation公司制企業(yè)incorporatedcorporation股份有限公司paid-incapital投入資本liquidationparticipationright參與清算權(quán)firstrefusalright優(yōu)先購買權(quán)Keyterminolo