Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

12. Stockholders' Equity

Characteristics of a Corporation

Financial Accounting

12. Stockholders' Equity

Characteristics of a Corporation

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

For a corporation, equity capital is provided by:

Employees through payroll deductions

Creditors who lend money to the corporation

Shareholders who purchase the corporation's stock

The board of directors through management decisions

Previous problemNext problem

Verified step by step guidance

Understand the concept of equity capital: Equity capital refers to funds raised by a corporation through the sale of shares to investors, known as shareholders. These funds represent ownership in the company.

Identify the source of equity capital: Equity capital is provided by shareholders who purchase the corporation's stock. This is distinct from debt capital, which is borrowed from creditors.

Clarify why other options are incorrect: Employees through payroll deductions do not provide equity capital; this is typically related to employee benefits or retirement plans. Creditors lend money, which is considered debt, not equity. The board of directors does not provide capital; they oversee management decisions and governance.

Relate equity capital to ownership: Shareholders who purchase stock become partial owners of the corporation, and their investment contributes to the equity capital of the company.

Summarize the importance of equity capital: Equity capital is crucial for funding business operations, expansion, and growth without incurring debt obligations. It also aligns the interests of shareholders with the success of the corporation.