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Advanced Corporate Accounting notes
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Corporate Accounting is a special branch of accounting which deals with the accounting for companies ,preparation of their final accounts and cash flow statements, analysis and interpretation of companies's financial results and accounting for specific events like amalgamation, absorption, preparation of consolidated balance sheets. A public company usually refers to a company that is permitted to offer its registered securities (stock, bonds, etc.) for sale to the general public, typically through a stock exchange, but also may include companies whose stock is traded over the counter (OTC) via market makers who use non-exchange quotation services such as the OTCBB and the Pink Sheets. The term "public company" may also refer to a government-owned corporation. This meaning of a "public company" comes from the tradition of public ownership of assets and interests by and for the people as a whole (public ownership), and is the less-common meaning in the United States. Advantages It is able to raise funds and capital through the sale of its securities. This is the reason why public corporations are so important: prior to their existence, it was very difficult to obtain large amounts of capital for private enterprises. In addition to being able to easily raise capital, public companies may issue their securities as compensation for those that provide services to the company, such as their directors, officers, and employees.
PRIVATE COMPANY The term privately held company refers to the ownership of a business company in two different ways: first, referring to ownership by non-governmental organizations; and second, referring to ownership of the company's stock by a relatively small number of holders who do not trade the stock publicly on the stock market. Because of these two different meanings, the use of the term should normally be avoided unless the context makes clear which definition is intended. Less ambiguous terms for a privately held company are unquoted company and unlisted company. Though less visible than their publicly traded counterparts, private companies have a major importance in the world's economy. In 2005, the 339 companies on Forbes' survey of closely held U.S. businesses sold a trillion dollars' worth of goods and services and employed 4 million people. In 2004, the Forbes' count of privately held U.S. businesses with at least $1 billion in revenue was only 305. Koch Industries, Bechtel, Cargill, Chrysler, PricewaterhouseCoopers, Flying J, Ernst & Young, Publix, and Mars are among the largest privately held companies in the United States. IKEA, Victorinox, and Bosch are examples of Europe's largest privately held companies. There has been a general confusion among corporate managers about whether to have the status of their company as private or public. Well, it basically depends on the requirement it needs to be. Notably, many companies prefer it to be private considering the kind of privileges they enjoy being private. Here’s a brief list of concessions and privileges which favour formation of private limited companies: Privileges: - Limited liability, - Simple and easy formation, - Immediate commencement of business upon incorporation, - Liberal payment of remuneration and loans to directors without any restrictions, - Easier inter-corporate loans - Lesser disclosure requirements - Tremendous ease in operation - Two directors are enough - Two Shareholders are adequate - Need not declare dividend - Listing of shares not mandatory - Directors need not hold qualification shares These continue to be the dominating factors for carrying on trade and industry through the medium of private limited companies. Limitations: Nevertheless, there are limitations too. Under the Companies Act, a private limited company is: - prohibited to issue any invitation to the public to subscribe to any shares or in debentures of the company - to limit the number of its members to 50 - to restrict the right of its members to transfer shares
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