Bernie just started a business and is trying to raise capital. He has both accredited and non-accredited investors investing in the company. What constraints on investments for new businesses apply here?
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Bernie just started a business and is trying to raise capital. He has both accredited and non-accredited investors investing in the company. What constraints on investments for new businesses apply here?
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- You are a consultant for several emerging, high-growth technology firms that were started locally and have been a part of a business incubator in your area. These firms start out as sole proprietorships but quickly realize the need for more capital and often incorporate. One of the common questions you are asked is about stockholders equity. Explain the characteristics and functions of the retained earnings account and how the account is different from contributed capital.You are a consultant for several emerging, high growth technology firms that were started locally and have been a part of a business incubator in your area. These firms start out as sole proprietorships but quickly realize the need for more capital and often incorporate. One of the common questions you get is about stockholders equity. Explain the key ways the companies need to view retained earnings if they want to use it as a source of capital for future expansion and growth after incorporating.How do I do a general journal entry on this scenario: Seeing that the business is getting some traction, but could benefit for more capital, Scoot Blout invests another $30,000 of his personal money into the business.
- You are a consultant for several emerging, high-growth technology firms that were started locally and have been a part of a business incubator in your area. These firms start out as sole proprietorships but quickly realize the need for more capital and often incorporate. One of the common questions you are asked is about stockholder’s equity. Explain the characteristics and functions of the retained earnings account and how the account is different from contributed capital. a. Contributed capital has been provided directly by the owners; retained earnings has been generated through operations. b. Contributed capital can be returned to owners by way of dividends; retained earnings are permanent. c. Profits increase retained earnings while losses decrease contributed capital. d. Contributed capital represents the par or stated values of issued and outstanding shares; any additional amounts contributed by owners are included in retained earnings.Chino, a newly certified accountant, is planning to put up an accounting firm. He has a starting capital of only Php 8,000.00. He does not know how to start and establish his business. He has only one friend, Cris, who agreed to join in his business. Cris has no capital, but he is more seasoned, that is why Chino must include or join Cris in his dream firm. How would you advise Chino to start his business?Hudson Signs, Inc., needs funds, and Alley Hudson, the president, has asked you to considerinvesting in the business. Answer the following questions about the different ways that Hudsonmight organize the business. Explain each answer.a. What forms of organization will enable the owners of Hudson Signs, Inc., to limit theirrisk of loss to the amounts they have invested in the business?b. What form of business organization will give Alley Hudson the most freedom to manage the business as she wishes?c. What form of organization will give creditors the maximum protection in the event thatHudson Signs, Inc., fails and cannot pay its debts?
- Steve Osbourne is considering opening a business, but the major decision faced is how to organize the business. Steve anticipates generating a massive profit during the first year and that the following years should be relatively profitable. Although he has enough to start the business now as a partnership, he believes cash flow may be an issue as the company grows. Steve believes that the corporate form of operation will be his best option and have hired you as a consultant and seek your advice. Answer the following questions for Steve. Is it true or false that corporations muse issue common stock, but may or may not decide to issue preferred stock? Is it true or false that all forms and classes of stock carry voting rights? Is it true of false that stock sold for amounts in excess of par value results in a gain reported on the income statement?Steve Osbourne is considering opening a business, but the major decision faced is how to organize the business. Steve anticipates generating a massive profit during the first year and that the following years should be relatively profitable. Although he has enough to start the business now as a partnership, he believes cash flow may be an issue as the company grows. Steve believes that the corporate form of operation will be his best option and have hired you as a consultant and seek your advice. Is it true or false that corporations muse issue common stock, but may or may not decide to issue preferred stock? Is it true or false that all forms and classes of stock carry voting rights? Is it true of false that stock sold for amounts in excess of par value results in a gain reported on the income statement?Mr. Ahmed has been working in a small company for many years and earns a living. Due to theincrease in the size of his family (dependent members), the income earned now proves to beinsufficient. Mr. Ahmed approaches his friend Mr. Azad, who has plans of starting a new venture.Mr. Azad is skilled, passionate and has new ideas that would enable him to start a newmanufacturing venture, but lacks capital. Mr. Ahmed, who knows little about doing business, hassaved money over the years and plans to invest the same in a partnership concern with Mr. Azad.Mr. Ahmed wishes to continue his job as well as participate in the partnership concernonly by investing his saved money.Using the above caseA) You are required to advise and explain in detail, the nature of partnership that the above people must enter into ,B) List down the various clauses that need to be incorporated in the partnership deed.
- Karen and Yanique are opening a jewellery store with no competition in the area from which they intend to operate their business. Their fundamental decision is how to organize the business. They anticipate super profits the first year, with the ability to sell franchises in the future. Although they have enough to start the business now as a partnership, cash flow will be an issue as they grow and as such, they feel the corporate form of operation will be best for the long term. They seek your advice . If the corporation when formed sets a par value for its shares low and issue common stock for a price above par, what is this amount above par called? Can this amount be treated as a gain, income, or profit for the corporation? Please give the reason for your answerYou are an accounting student at your local university. Your brother has recently managed to save $5,000, and he would like to invest some of this money in the stock market, so hes researching various global corporations that are listed on the stock exchange. He is reviewing a company that has Goodwill as an item on the balance sheet. He is quite perplexed about what this means, so he asks you for help, knowing that you are taking accounting classes. How would you explain the concept of goodwill to him by comparing it to other types of resources the company has available?Your high school friend started a business that has blossomed over the years, and he is considering incorporating so he can sell shares of stock and expand. He has asked you for help understanding the costs of incorporating. What are some of the costs that he will face as he organizes the corporation and begins to sell shares of stock?