What, if any, accounting is required by a company when one of its stockholders sells stock to someone else?

This is for a study guide to prepare for a final exam in an introductory accounting course and I can't find anything on this question in the book. So if any of you accounting gurus could help me out I would appreciate it.

Nothing needs to be done to the corporation's accounts when one shareholder sells his or her shares to another person. If the company bought or sold the shares, it would be a different matter.

The corp. may have to do some bookkeeping to determine who is to receive the dividends, but that isn't really accounting.

For a public company, I don't think there needs to be anything done with the balance sheet, income statement, or cash flows. An insider might have to file some SEC things, but that's a slightly different issue. For example, if you buy 100 shares of Yahoo from someone else through your broker, Yahoo doesn't care because it doesn't affect their finances directly.

Generally you are just talking about the owner of record. The movement of stock would mean someone would have to keep track of the owners of record. There is not necessarily an accounting maneuver except the cost in wages and paper (etc) of keeping up with that.

A stock is a part ownership in a company, so if a stock changes hands, it's only the name of the "owner" which changes. The sale of stock does not appear on the company's books because it has no effect on cash flows. The exceptions are a) if it indicates a change on majority stakeholders, or b) if the sale results in a large fluctuation in the stock price, which would then impact the equity section of the financial report.

I might be wrong though, since my background is in finance (investment modelling) not accounting.

Good luck!

You must account for a dividend difference depending on the specific time the stock is sold.Now,there's the obvious which is the actual amount of stock that gets subtracted from one account and placed in another.Another factor might be a maturity date.Hope that helps.

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