Week Three Reflection Summary
July 22, 2013
This week we discuss three topics. We discussed, about Corporations and why company decides to become incorporated. We learned the two most common ways to classify a company is by its purpose and its ownership. We learned about companies that are for profit and not-for-profit. Ownership is a publicly held company and a privately held company. The main characteristics of a corporation are being a separate legal existence from its owners. It also limits the liability of its stockholders. A corporation allows its ownership to be transferable such as a stock offering. Although it doesn’t change the daily operation of the company it allows a company to be owned by many people who all have a limited voting right into the company. It allows the company to maintain a continuous life and also allows the company to ability to raise capital through issuance of stocks and bonds. By creating a corporation the company is responsible for taxes as well as government regulations. We also learned that In order for a corporation to be created an application must be submitted with the Secretary of the State where the company will be created. Furthermore, we also discuss the advantages and disadvantages, and steps required to become a corporation. We learned about the different types of dividends a corporation may issue, Dividends are earning distributions that a company pays to the shareholders. The most common type of dividends is cash dividends, which is generally a percentage of earning. Other types of dividends include stock dividend, property dividend, warrants dividend and special dividends. A company pays dividend when it is making money and can afford to distribute its earning. Generally, when a company is mature and generate a stable income, it would distribute its earning regularly to its shareholders. Since dividends are tied to earnings, common stockholders are not guaranteed on receiving...