Preferred Shares (Stock) The words such as stock and securities are currently used not only by business-related I have chosen to research preferred stock for this individual project.
At first, from an accounting stand point, capital stock (stock) is a part of shareholders’ equity as the later is composed of capital stock and retained earnings and represents the amount by which a company is financed through common and preferred shares.
The definition of stock varies across the dictionaries. However, most dictionaries agree that stock (also referred to as shares or equity) is a share in the ownership of a company: “a type of security that signifies ownership in a corporation and represents a claim on part of the corporation’s assets and earnings” (<http://www.investopedia.com/terms/s/stock.asp#axzz1dhYoEz9a >) “entitling the stockholder to dividends and to other rights of ownership, such as voting rights” (<http://www.thefreedictionary.com/Stocker>). The stock original capital is paid into or invested in the business by its founders and is divided into multiple shares, the total of which is stated at the time of business formation. Additional paid in capital of the stock is raised through the sale of shares. As one acquires more stock, their ownership stake in the company becomes greater. There are two main types of stock: common and preferred. Preferred stock, as well as common stock, additional paid-in-capital, retained earnings, and treasury stock are all reported on the balance sheet in the stockholders’ equity. (give example, find a balance sheet demonstrating that)
The majority of stock issued by companies is in the form of common stock. Common stock represents ownership in a company and entitles the owner to vote at shareholders’ meetings and receive dividends. Investors get one vote per share to elect the board members. Although common