Week 3 Team Reflection
Nereyda Bravo, Kolton Wentworth, and Randolph Rodarte
ACC/291- Principles of Accounting
September 09, 2013
Week 3 Team Reflection
The issuance of different stocks by corporations is a topic that we are getting a better understanding of through reading the text and studying the Wiley plus texts. Authorized stock is the amount of stock that a corporation is authorized to sell as indicated in its charter, and within that broad spectrum are many different kinds of stock that the corporation can chose to sell. Examples of those stocks are par-value stock and no-par value stock. A par value stock is capital stock that has been assigned a value per share in the corporate charter, and a no par value stock is stock that has not been given a value. Preferred stock is capital stock that has some contractual preferences over common stock. With regards to the name ...view middle of the document...
Each of the different types of stock represents a form of ownership.
Common stock is the most common and entitles shareholders to dividends when applicable and voting rights for the board. Common stock takes a lower priority than corporate bonds, preferred shares, and company creditors. Preferred stock conveys ownership and takes priority over common stock if a company must liquidate or declares bankruptcy. It traditionally comes with no voting power but has a higher dividend. The company can also purchase these back at a fixed price within a decided time period.
Class A shares are shares that have a higher or different voting right. These stocks are typically held for founders or family members who want to maintain control of the company. Class B shares are when there are more than one class of stock offered. They carry one vote typically.
The objectives for this week are new territory for us as students, the journal entries relating to stocks and dividends are becoming a little difficult to fully comprehend. We had a hard time comprehending the section “Accounting for Stock Investments” and the holdings and percentages information. The main difficulty understands how to record the gains or losses when investments are sold and whether to credit or debit the account. Paying more attention to our 401K or other investments and following the NY Stock Exchange may be a good place to start learning and relating the accounting process of stocks and investments.
There is also treasury stock which is a company’s own stock that they have issued, fully paid for, and reacquired from the outside holders. These treasury stocks are not retired and a company may want to purchase their stock back because the market has been undervaluing their business. There are many nuances that we are still getting used to and have yet to fully grasp but we are working hard to understand them to apply what we learned to the field of business finance that we are perusing. We as a team hope to gain the knowledge to manage our finances dynamically and aggressively by understanding stocks, bonds, interest, and all of the covered material in the book.