Glossary of Financial Accounting Ch. 11
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- What is the Authorized Number Of Shares?
- The maximum number of shares of a corporation's stock that can be issued as specified in the charter.
- What are Issued Shares?
- The total number of shares of stock that have been sold.
- What are Outstanding Shares?
- The Total number of shares of stock that are owned by stockholders on any particular date.
- What are the 3 benefits of stock ownership?
- A voice in management, Dividends, Residual Claim (payout upon liquidation).
- What is Common Stock?
- The basic voting stock issued by a corporation.
- What is Par Value?
- The nominal value per share of a capital stock specified in the charter; serves as the basis for legal capital.
- What is Legal Capital?
- The permanent amount of capital defined by state law that must remain invested in the business; serves as a cushion for creditors.
- No-Par Value Stock?
- Capital stock that has no par value specified in the corporate charter.
- What is Treasury Stock?
- A corporations own stock that had been issued but was subsequently reacquired and is still being held by that corporation. These shares have no voting, dividend, or other stockholder rights while held as treasury stock.
- What is the Declaration Date?
- The date on which the board of directors officially approves a dividend.
- What is the Record Date?
- The Date on which the corporation prepares the list of current stockholders as shown on its records. Dividends can be paid only to the stockholders who own stock on the date.
- What is the Payment Date?
- The date on which a cash dividend is paid to the stockholders of record.
- What is a Stock Dividend?
- A distribution of additional shares of a corporation's own stock.
- What is a Stock Split?
- An increase in the total number of authorized shares by a specified ratio; does not decrease retained earnings.
- What is Preferred Stock?
- Stock that has specified rights over common stock. It does not have voting rights, receives priority on dividends or if the company goes out of business, it has a fixed dividend rate
- What is Current Dividend Preference?
- The feature of preferred stock that grants priority on preferred dividends over common dividends.
- What is Cumulative Dividend Preference?
- The preferred stock feature that requires specified current dividends not paid in full to accumulate for every year in which they are not paid. These cumulative preferred dividends must be paid before any common dividends can be paid.
- What Dividends In Arrears?
- Dividends on cumulative preferred stock that have not been declared in prior years.
- What are the advantages of a Corporation?
- (a) Transferability of ownership (b) limited liability to the owners, and (c) the ability to accumulate large amounts of resources.
- What is the charter of a corporation?
- A legal document from the state that authorizes its creation as a separate legal entity. The charter specifies the name of the entity, its purpose, and the kinds and number of shares of capital stock it can issue.
- What is Authorized Capital Stock?
- The maximum number of shares of stock that can be sold and issued as specified in the charter of the corporation.
- What is issued capital stock?
- The total number of shares of capital stock that have been issued by the corporation at a particular date.
- What is Outstanding Capital Stock?
- The Number of shares currently owned by the stockholders.
- What are the two basic sources of stockholder's equity?
- (A)Contributed Capital - The amount invested by stockholders through the purchase of stock.
(B) Retained Earnings - The accumulated amount of all net income since the organization of the corporation, less losses and less the accumulated amount of dividends paid by the corporation since organization.
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