Corporation: A corporation is form of the business organization having separate legal entity which is different from its owners. It is created by the law and it has perpetual succession. Common Stock: Common stock is a category of the stock which has last right on the company’s earnings and paid back at last when company liquidates. The holders of the common stock enjoy the ownership of the company but they do not posses preferential right on getting dividends. Preferred stock : The category of the stocks which have preferential right on company’s dividend and paid back prior to the common stock when company liquidates. Journalizing: It is the process of recording the transactions of an organization in a chronological order. Based on these journal entries recorded, the amounts are posted to the relevant ledger accounts. Accounting rules for journal entries: To increase balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue and gains. To decrease balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue and gains. To prepare: Journal entries.

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Chapter 13, Problem 2aDIE

To determine

Corporation: A corporation is form of the business organization having separate legal entity which is different from its owners. It is created by the law and it has perpetual succession.

Common Stock: Common stock is a category of the stock which has last right on the company’s earnings and paid back at last when company liquidates. The holders of the common stock enjoy the ownership of the company but they do not posses preferential right on getting dividends.

Preferred stock: The category of the stocks which have preferential right on company’s dividend and paid back prior to the common stock when company liquidates.

Journalizing: It is the process of recording the transactions of an organization in a chronological order. Based on these journal entries recorded, the amounts are posted to the relevant ledger accounts.

Accounting rules for journal entries:

To increase balance of the account: Debit assets, expenses, losses and credit all liabilities, capital, revenue and gains.

To decrease balance of the account: Credit assets, expenses, losses and debit all liabilities, capital, revenue and gains.

To prepare: Journal entries.

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