Chap 20

Question 1

Authorized Capital Stock

Answer 1

the number of shares authorized for issue by the corporate charter

Question 2

Bylaws

Answer 2

the guidelines for conducting a corporation’s business affairs

Question 3

Callable Preferred Stock

Answer 3

stock that gives the issuing corporation the right to repurchase the preferred shared from the stockholders at a specific price.

Question 4

Capital Stock Ledger

Answer 4

a subsidiary ledger that contains a record of each stockholder’s purchases, transfers and current balance of shared owned; also called Stockholders’ Ledger

Question 5

Capital Stock Transfer Journal

Answer 5

a record of stock transfers used for posting to the stockholders’ ledger

Question 6

Common Stock

Answer 6

the general class of stock issued when no other class of stock is authorized; each share carried the same rights and privileges as every other share. Even if preferred stock is issued, common stock will also be issued.

Question 7

Convertible Preferred Stock

Answer 7

preferred stock that conveys the right to convert that stock to common stock after a specified date or during a period of time.

Question 8

Corporate Charter

Answer 8

a document issued by a state government that establishes a corporation

Question 9

Cumulative Preferred Stock

Answer 9

stock that converts to its owners the right to receive the preference dividend for the current year and any prior years in which the preference dividend was not paid before common stockholders receive any dividends.

Question 10

Dividends

Answer 10

distributions of the profits of a corporation to its shareholders.

Question 11

Limited Liability Company (LLC)

Answer 11

provides limited liability to the owners, who can elect to have the profits taxes at the LLC level or on their individual tax returns

Question 12

Limited Liability Partnership (LLP)

Answer 12

a partnership that provides some limited liability for all partners

Question 13

Liquidation Value

Answer 13

value of assets to be applied to preferred stock, usually par value or an amount in excess of par value, if the corporation is liquidated

Question 14

Market Value

Answer 14

the price per share at which stock is bought and sold

Question 15

Minute Book

Answer 15

a book in which accurate and complete records of all meetings of stockholders and directors are kept.

Question 16

Noncumulative Preferred Stock

Answer 16

stock that conveys to its owners the stated preference dividend for the current year, but no rights to dividends for years in which none were declared.

Question 17

Nonparticipating Preferred Stock

Answer 17

stock that conveys to its owners the right to only the preference dividend amount specified on the stock certificate.

Question 18

No-Par-Value Stock

Answer 18

stock that is not assigned a par value in the corporate charter

Question 19

Organization Costs

Answer 19

the costs associated with establishing a corporation

Question 20

Par Value

Answer 20

an amount assigned by the corporate charter to each share of stock for accounting purposes

Question 21

Participating Preferred Stock

Answer 21

stock that conveys the right not only to the preference dividend amount but also to a share of other dividends paid

Question 22

Preemptive Right

Answer 22

a shareholder’s right to purchase a proportionate amount of any new stock issued at a later date

Question 23

Preference Dividend

Answer 23

a basic or stated dividend rate for preferred stock that must be paid before dividends can be paid on common stock

Question 24

Preferred Stock

Answer 24

a class of stock that has special claims on the corporate profits or, in case of liquidation, on corporate assets

Question 25

Registrar

Answer 25

a person or institution in charge of the issuance and transfer of a corporation’s stock

Question 26

Shareholder

Answer 26

a person who owns shares of stock in a corporation; also called a stockholder

Question 27

Stated Value

Answer 27

the value that can be assigned to no-par-value stock by a board of directors for accounting purposes

Question 28

Stocker Certificate

Answer 28

the form by which a capital stock is issued; the certificate indicates the name of the corporation, the name of the stockholder to whom the certificate was issued, the class of stock, and the number of shares

Question 29

Stockholders’ Equity

Answer 29

the corporate equivalent of owner’s equity; also called shareholders’ equity

Question 30

Stockholders’ Ledger

Answer 30

“capital stock ledger”

Question 31

Subchapter S Corporation (S Corp)

Answer 31

an entity formed as a corporation that meets the requirements of subchapter S of the Internal Revenue Code to be treated essentially as a partnership, so that the corporation pays no income tax

Question 32

Subscribers’ Ledger

Answer 32

a subsidiary ledger that contains an account receivable for each stock subscriber

Question 33

Subscription Book

Answer 33

a list of the stock subscriptions received

Question 34

Transfer Agent

Answer 34

a person or institution that handles all stock transfers and transfer records for a corporation