AC 224 (chapter 11) Flashcards
What is a Corporation?
An entity that is separate and distinct from its owners, with rights, privileges, duties, and responsibilities like a person.
What type of ownership does a Private Corporation have?
Concentrated ownership that is not offered publicly.
What type of ownership does a Public Corporation have?
Widespread ownership that can be bought and sold freely (transferable).
What is limited liability in the context of corporations?
Owners may forfeit only their initial investment in the company if the corporation has outstanding obligations.
Who manages a Corporation?
A Board of Directors that oversees the company’s officers.
What is Double Taxation?
The corporation pays taxes on its earnings, and owners pay taxes on dividends received.
What is a Charter in relation to Corporations?
A formal grant from a state government that includes information about future stock issuances.
What is Common Stock?
The most common type of ownership in a corporation.
What is Authorized Stock?
The maximum number of shares a corporation is authorized to sell, outlined in the charter.
What is Issued Stock?
Shares that have been authorized and issued (sold) to stockholders.
What is Treasury Stock?
Shares that have been authorized and issued to stockholders and subsequently repurchased by the issuing company.
What is Outstanding Stock?
Shares that have been authorized and issued and remain in the hands of stockholders, excluding treasury stock.
What is Par Value?
An arbitrary amount assigned to each share of stock, used to record stock on the balance sheet.
What is Market Price in terms of stock?
The price at which each share of stock is bought and sold.
What is Paid-in-Capital?
The excess of the market price above par value.
What is a Cash Dividend?
A distribution of cash to a corporation’s stockholders paid out of retained earnings.
What is a Liquidating Dividend?
A dividend paid out of additional paid-in capital (APIC).
What is a Declared Dividend?
A dividend that has been announced but not yet paid, recorded on the date of declaration.
What is the Record Date for dividends?
The date on which the right to receive a dividend is declared.
What is the Payment Date for dividends?
The date on which the dividend is paid.
What are Cumulative Dividends?
Dividends in arrears that must be paid before the current year dividend is paid.
What are Non-Cumulative Dividends?
Dividends in arrears that are not considered in allocating the current year’s dividends.
What is a Stock Dividend?
A pro rata distribution of the corporation’s own stock to stockholders, paid out of retained earnings.
What is a Stock Split?
An increase in the number of shares outstanding that does not change the value of the total stock outstanding.
