when a company “goes public in an IPO” what does that mean?
Beulah asks:
also, how would it reflect its financial statements…like what specific accounts would this affect ??
also, how would it reflect its financial statements…like what specific accounts would this affect ??
thx in advanced!
not to sound harsh, but a little more detail would help!
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Shares of common stock is sold to the public. Owners’ Equity and cash are affected.
IPO means Initial Public Offering and it shouldn’t affect the accounts but now they are subject to the rules of the Security and Exchange Commission.
Going public in an IPO (Initial Public Offering) means that a company lists its share for the first time in a Stock Exchange. The accounting implications depends on the rules of the country it is in.
Most likely an IPO involves raising new capital from investors so this would impact cash and share capital (Dr Cash; Cr Equity). Any IPO costs (e.g. brokerage and capital raising costs) are offset against the equity raised (rather than impacting P&L).
The other aspect is that “Listed” companies normally have to comply with significantly more disclosures in its financial statements than private companies.
It is sale to people in public their shares of a company
People who need shares they purchase and wait for a right time for higher price they too sell to other people
It is a luck if they could sell for more prices
some times they loose