Most business starting point is a small company owner or partnership. If there are multiple owners, the most common type of business is a corporation. The law considers a company as a genuine living person. Like adults, a corporation is treated as a clear, independent individual with rights and responsibilities. The "birth certificate" of the corporation is a legal form submitted to the Secretary of State of the state in which the corporation was created or incorporated. It must have a legitimate name like a person.
A corporation is separate from its owner. It is responsible for own debt. If a company goes bankrupt, the bank can not come after the shareholder.
Companies issue share ownership to people who invest money in business. These ownership shares are documented by the owner's name and the state share certificate how many shares are owned. Our own registered list will own only a lot of stocks. Because they own shares issued by the company, the owner of the company is called the shareholder. One share of shares is one unit of ownership and how much one share depends on the total number of shares of business problem worth. Business shares more shares, share of small total owner's equity share, each share a business problem.
Stock shares come in different classes of stocks. Preferred shareholders promise a certain amount of cash dividends annually. General shareholders have most risks. If a company is finished with financial troubles, it is necessary to repay its debt first. If arbitrary money remains, that money will go first to the preferred shareholders. If something remains after that, that money will be distributed to ordinary shareholders.
What is a financial dressing?
Finance managers can do specific things to increase or decrease the net income recorded in that year. Profit smoothing, profit smoothing just old window - dressing. This is not the same as fraud, or cooking books.
Smoothing most profits involves pushing on a portion of the revenue and / or expenses in other years than normally recorded. A common technique for smoothing profits is to delay normal maintenance and repair. This is called delayed maintenance. Many periodic and repetitive maintenance costs necessary for automobiles, trucks, machinery, equipment and buildings can be delayed or postponed until later.
Businesses that use significant amounts for employee training and development may delay these programs until next year so the costs of the current year
The company can cut back into current year spending for market research and product development.
Business can be easier with rules on when late paying customers are written in cost as bad loans or uncollectible accounts receivable. The business can place some records of the cost of bad loans up to the next reporting year.
Fixed assets that are not actively used may have little or no current or future value for the business. Instead of amortizing the non depreciation cost of the impaired asset as a loss in the current year, the business may delay amortization until next year.
It has increased profitably for a long time that it can be expended the operation timing. Companies can overwhelm numbers with massage so that their financial statements misunderstand, but this is not illegal. It is a payment pole of Peter by virtue of profit smoothing etc. of the thing. The accountants see these as compensating effects. The effect will offset the next year and cancel the effect of the current year. Less cost will be balanced this year with more expense next year.
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