Acc 291 Week 3 Dq's

DQ#1

Why does a company choose to form as a corporation? What are the steps required to become a corporation? What are the advantages and disadvantages of the corporate form of doing business?

For DQ 1 I have chosen to answer question #1;

Corporations have a separate legal existence giving their investors and stockholders limited liability in the event of a law suit or other legal problems. Corporations do not tie an individual or group of individuals to the company. Ownership is gained through shares that can be sold and bought. A shareholder has the choice to sell only a small amount of their shares or all without having to receive consent from other shareholders. A corporation has an unlimited life span.

In order to form a corporation an application must be filed with the Secretary of State in which the corporation will be located. The application must contain the name and purpose of the corporation, the amounts and numbers of shares of capital stock that is going to be issued and which kind, the names of the incorporators, and the amounts of stock that each has subscribed. Once the corporation is approved by the state it is then given a charter.

A few advantages and disadvantages include a separate legal existence, continuous lifespan, limited liability, and easy transfer of ownership rights and stocks. However there is also a separation of ownership and management, more government regulations and double taxations.

DQ#2

What are the different types of dividends corporations may issue? When should a corporation pay dividends? Do you prefer a stock dividend or a cash dividend? Why?

For DQ 2 I have chosen to answer question #1

There are three types of dividends issued by a corporation. They are cash, stock, and stock split. Cash dividends are generally paid quarterly, however some may choose to pay annually or semiannually, it depends upon the current profitability of the corporation and how the payments were set up from the start. Stocks can be...