Term 1 Unit 1 Discussions On Corporations And Financial

Term 1 Unit 1 Discussionslm 4 Corporationsacct1105 Financial Account

Define a corporation and mention two characteristics of a corporation. Explain the following: a. Legal Entity b. Stockholder. Define an organizational chart of a corporation. Define the following concepts: a. Stockholder equity b. Paid-in capital c. Retained earnings d. Dividend e. Stock. Explain your understanding of the following: a. Outstanding stock b. Par value c. Common stock d. Preferred stock e. Cumulative preferred stock f. Premium g. Discount h. Stock split i. Treasury stock. Consider the question of whether the United States should converge accounting standards with IFRS. Make a list of arguments that favor convergence. Make a list of arguments that favor non-convergence. Indicate your own conclusion regarding whether the United States should converge with IFRS, and indicate the primary considerations that determined your conclusion. Read and analyze a case involving ethical dilemmas faced by an accountant, considering issues such as unethical practices, legal consequences, and professional responsibility. Complete questions about the case, including justification of actions and possible outcomes if the fraud is discovered by authorities. Read about key economic concepts such as Market Power, and prepare an explanation including a definition, real-world example, and importance in economics.

Paper For Above instruction

The concept of a corporation is fundamental to understanding modern business structures. A corporation is a legal entity that is separate from its owners, known as stockholders or shareholders. This separation provides limited liability, meaning shareholders' personal assets are protected from the corporation’s debts and obligations. Two key characteristics of a corporation include its legal status as an independent entity and the ability to issue stock, which facilitates raising capital from multiple investors. The organizational chart of a corporation delineates the hierarchy and reporting relationships within the company, illustrating the flow of authority from the shareholders and board of directors down to executive and operational levels.

Equity in a corporation, known as stockholder or shareholders' equity, represents the owners’ claim after all liabilities are settled. It comprises components such as paid-in capital, which includes funds received from shareholders during the issuance of stock (at par or premium), and retained earnings, which are accumulated profits not distributed as dividends. Dividends are distributions of earnings to shareholders, reflecting their ownership stakes. Stock can be classified into common and preferred stock, each with distinct rights. Common stockholders typically have voting rights and residual claim to assets, while preferred stockholders have priority in dividends and liquidation but usually lack voting rights. Preferred stock can be cumulative, meaning missed dividends accrue over time, ensuring shareholders receive their entitled payments before common stockholders.

Other important concepts include par value, which is a nominal value assigned to stock, and premium or discount, which refer to the price above or below par at which stock is issued. A stock split involves dividing existing shares into multiple shares to increase liquidity, while treasury stock represents shares repurchased by the company, reducing the number of outstanding shares and potentially impacting stock price and voting rights.

In the realm of accounting standards, the debate over convergence between U.S. GAAP and IFRS centers on the desire for harmonized global financial reporting. Proponents of convergence argue that it facilitates comparability, attracts foreign investment, reduces the complexity for multinational companies, and streamlines cross-border operations. Critics, however, raise concerns about losing local control, the appropriateness of adopting standards tailored to specific economic contexts, and the potential for reduced transparency and accountability. My conclusion is that the U.S. should cautiously pursue convergence, emphasizing preserving the quality and transparency of financial reporting while adopting elements that enhance comparability and efficiency for global markets. The decision hinges on balancing international harmonization with national economic interests and investor protections.

The ethical case study involving Charles highlights critical issues of professional integrity, legal compliance, and personal ethics in accounting conduct. Charles faced immense pressure from his employer to manipulate financial reports to meet managerial expectations. Justifying the unethical recording of fictitious revenues is fundamentally flawed, as it undermines trust, violates legal statutes, and compromises the integrity of financial reporting. To avoid such dilemmas, professionals must uphold ethical standards, seek guidance from professional bodies, and process concerns through proper channels, such as internal auditors or external regulators. If the SEC discovers such fraud, both Charles and his boss could face serious penalties, including fines and imprisonment, and damage to professional reputation. Ultimately, responsible conduct in accounting is essential to maintaining the credibility of financial markets and public trust.

The economic concept of market power refers to the ability of a firm or group to influence the price of a product or service in the marketplace. Market power is significant because it can lead to monopolistic or oligopolistic behaviors, resulting in higher prices, reduced output, and less consumer choice. An example of market power is a large pharmaceutical company holding patent rights that prevent competitors from entering the market for a certain drug, enabling the company to set prices above competitive levels. Understanding market power is crucial for regulators designing policies to promote fair competition and prevent abuse of market dominance. It demonstrates the importance of anti-trust laws and oversight to ensure healthy economic dynamics, protect consumers, and foster innovation in industries where market power might otherwise diminish competition.

References

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• Financial Accounting Standards Board (FASB). (2020). Accounting Standards Codification (ASC). FASB.
• International Financial Reporting Standards (IFRS). (2023). IFRS Foundation. Available at: https://www.ifrs.org
• Kothari, S. P. (2001). Capital Markets Research in Accounting. Journal of Accounting and Economics, 31(1-3), 105–231.
• Manipal University Journal. (2019). Ethics in Accounting and Auditing. Manipal University Journals.
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• U.S. Securities and Exchange Commission (SEC). (2022). Financial Reporting Releases and Guidance. SEC.gov.
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