Chapter 10 - Shareholders' Equity Flashcards
What does the term “share capital” mean?
How much money a company’s owner/owners has/have invested in the company.
What does the term “retained earnings” mean?
Profit from prior periods that hasn’t been distributed to the owner/owners.
Where are equity-related transactions reported?
In the statement of changes in equity.
True or false: a corporation is owned by its shareholders, but any assets and liabilities the corporation might have belongs to the corporation itself.
True
True or false: “share capital” and “paid-in-capital” refer to different types of capital.
False
Issuing shares increases what on the balance sheet?
Assets and equity.
True or false: dividends (from shares) have no effect on total assets, total liabilities, or total equity.
True
How do you calculate “earnings per share”?
Earnings per share = (Net income - Preferred dividends) / Average number of ordinary shares outstanding
Shareholders’ rights include what?
- voting
- dividends
- liquidation
- pre-emption
Account for shareholders’ right to vote.
The right to vote on matters that come before the shareholders.
Account for shareholders’ right to dividends.
The right to receive a proportionate part of any dividend.
Account for shareholders’ right to liquidation.
The right to receive a proportionate share of any assets remaining after liquidation.
Account for shareholders’ right to pre-emption.
The right to maintain one’s proportionate ownership in the corporation.
Account for authorized shares.
The maximum amount of shares a company can issue under its constitution.
Account for issued shares.
The amount of shares a company has issued to its shareholders.
Account for outstanding shares.
The amount of shares that the shareholders own.
