ACC 301 Vocab Exam 1 Flashcards
Common stock
The residual interest in a firm; equity which has voting rights
Cumulative P/S
P/S on which missed dividends must be paid prior to payment of a current dividend
Treasury stock
Reacquired stock of a firm
Preferred stock
Non voting stock on which dividends and assets at liquidation have higher priority for payment than does common stock
Liquidating dividend
Dividend not based on R/E of the firm. Reduction in equity
Discount on B/P
Represents the increase in interest recognized over the term of a bond because the yield rate is greater than the coupon rate. The decrease in present value of a B/P relative to par at issue due to the relationship
Debenture
Unsecured B/P (no collateral)
Participating P/S
P/S paid a dividend at a rate greater than that stated on the certificate
Preemptive right
Right to maintain ones ownership percentage in a firm before public sale of new C/S
Par value
Legal capital; amount recorded in a given security account at sale
Moral hazard
Tendency of managers to overstate their performance; may choose more malleable performance indicators. Tendency of buyers to overuse items such as insurance
Adverse selection
Tendency of managers to overstate their credentials. Tendency of more reckless individuals to buy items such as insurance
Stock dividend
A dividend consisting of additional shares of the underlying stock. Can be larger or small
Stock split
A change in the number of outstanding shares by reissuing shares with new par values
Dividend
A payment to owners based on stock ownership
Ex-dividend
Stock sold after the date of record are said to be sold in this way
Limited liability
Creditors are limited in that the assets they can claim to settle obligations must be those of the entity not those of owners or managers.
Leverage
Change in return due to use of debt financing
Debt extinguishment
Retirement of debt such as B/P
Arrears
Missed past dividends
Premium B/P
Adjunct account; represents the decrease in interest recognized over the term of a bond because the yield rate is less than the coupon rate
Dividend on
Stock sold before the date of record are said to be sold this way
Diluted EPS
Includes the effect of all potentially dilutive common shares that were outstanding during the period
Paid in capital
Any excess over par value paid in by the stockholders in return for the shares issued to them
Liability
Must have a future transfer of assets, implies a transaction or exchange, must be unavoidable
