course 9 Owners Equity 所有者权益.docx

Source of Capital: Owners’ EquityForms of Business OrganizationA. Sole Proprietorship独资 - Framework Business entity owned by a sole individual Sole proprietorship financing Owner’s invested capital Can borrow from banks – personally responsible No equity capital Not a legal entity; no ownership interest availableA. Sole Proprietorship - Accounting Capital account – to record the entries affecting owner’s equity Invested capital Add: earningsDeduct: drawings (withdrawals) Portion of drawings (withdrawals) could be considered as salaries or dividendsB. Partnership合伙企业 - Framework Owned jointly by two or more persons – partners Same features as proprietorship The partners are personally responsible for the business actions (of other partners) and for the debts and liabilities incurredLimited partnerships Managed by a general partner; receives large share of the income and would assume all the liabilities Limited partners; provide capital, not involved directly with the activities Intent of limited partnerships is to provide a shield to limit the legal liabilities of the partners B. Partnership - Accounting Owner’s capital account for each partner Amounts credited to each partner are based on terms of the partnership agreement Capital account – to record the entries affecting the partner’s equity Invested capital Add: earningsDeduct: drawings (withdrawals)C. Corporation公司(法人) - Framework Legal entity Charter - perpetual existence Responsible for taxes and legal liabilities Main advantage – able to raise capital (issuing bonds and stocks) Public corporation – shares traded on a securities exchange Privately held corporation – shares are owned by few individuals Ownership in a CorporationA. Stocks - Framework Corporations are authorized through their charter to issue shares Preferred shares Common shares Ownership in a corporation is through a stock certificate Recorded to the shareholder’s equity account2. Ownership in a CorporationB. Preferred Stock Preferred stoc