Accounting and Finance: An Introduction - McLaney and Atrill (2018) - Chapter 13 (Summary)
Accounting and Finance: An Introduction - McLaney and Atrill (2018) - Chapter 14 (Summary)
Accounting and Finance: An Introduction - McLaney and Atrill (2018) - Chapter 12 (Summary)
All for this textbook (12)
Written for
Kings College London (KCL)
International Management
International Finance and Accounting (7SSMM102)
All documents for this subject (11)
Seller
Follow
kimkx
Reviews received
Content preview
Week 3 – Finance and Accounting
Chapter 4 - Accounting for limited companies (1)
- Most businesses are limited companies
- Account for the majority of business activity and employment
The main features of limited companies
Legal nature
- Limited company = artificial person that has been created by law (separate legal
entity)
- Company has many rights and obligations that ‘real’ people have e.g. enter contracts
in its own name; sue people
- All UK companies are created (or incorporated) by registration; promoters (= people
wishing to create a company) fill in forms and pay registration fee (~100 pounds)
- Company’s name is added to the ‘Registrar of Companies’
- Owners = shareholders
- Ownership is normally divided into a number of shares
- Legal separateness of limited company and its shareholders leads to two important
features: perpetual life and limited liability
Perpetual life
- Perpetual existence = company will continue even where an owner of some, or even
all, of the shares in the company dies
- Shares simply pass to the beneficiary of his/her estate
- Company is unaffected by changes of ownership
- Shareholders or courts may bring the company’s existence to an end
o Assets are sold to generate cash to meet outstanding liabilities; remainders
are distributed to shareholders
o Voluntary liquidation = shareholders agree to end the life due to e.g.
achieved purpose
o Ended by courts when creditors have applied for it
Limited liability
- Company is responsible for its own debts and losses
- Shareholders limit their losses to the amount that they have paid for their shares
- Advantage for providers of equity finance, but not for all other stakeholders e.g.
creditors, suppliers
o Smaller, and less established firms have difficulties to convince suppliers
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller kimkx. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $5.18. You're not tied to anything after your purchase.
