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Financial Accounting > Chapter 11 > Flashcards

Chapter 11 Flashcards

1
Q

Retained earnings separately reported to inform stockholders of funding needs.

A

APPROPRIATED RETAINED EARNINGS

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2
Q

Total amount of stock that a corporation’s charter authorizes it to issue.

A

AUTHORIZED STOCK

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3
Q

Net income less any preferred dividends and then divided by weighted-average common shares outstanding.

A

BASIC EARNINGS PER SHARE

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4
Q

Recorded amount of equity applicable to common shares divided by the number of common shares outstanding.

A

BOOK VALUE PER COMMON SHARE

S/H Eq applicable to C/S / # of C/S outstanding

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5
Q

Equity applicable to preferred shares (equals its call price [or par value if it is not callable] plus any cumulative dividends in arrears) divided by the number of preferred shares outstanding.

A

BOOK VALUE PER PREFERRED SHARE

S/H Eq applicable to P/S / # of P/S outstanding

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6
Q

Amount that must be paid to call and retire a callable preferred stock or a callable bond.

A

CALL PRICE

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7
Q

Preferred stock that the issuing corporation, at its option, may retire by paying the call price plus any dividends in arrears.

A

CALLABLE PREFERRED STOCK

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8
Q

General term referring to a corporation’s stock used in obtaining capital (owner financing).

A

CAPITAL STOCK

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9
Q

Change in an accounting estimate that results from new information, subsequent developments, or improved judgment that impacts current and future periods.

A

CHANGE IN ACCOUNTING ESTIMATES

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10
Q

Corporation’s basic ownership share; also generically called CAPITAL STOCK.

A

COMMON STOCK

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11
Q

Capital structure that includes outstanding rights or options to purchase common stock, or securities that are convertible to common stock.

A

COMPLEX CAPITAL STRUCTURE

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12
Q

Preferred stock with an option to exchange it for common stock at a specified rate.

A

CONVERTIBLE PREFERRED STOCK

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13
Q

Business that is a separate legal entity under state or federal laws with owners called SHAREHOLDERS or STOCKHOLDERS.

A

CORPORATION

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14
Q

Preferred stock on which undeclared dividends accumulate until paid; common stockholders cannot receive dividends until cumulative dividends are paid.

A

CUMULATIVE PREFERRED STOCK

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15
Q

Date the directors vote to pay a dividend.

A

DATE OF DECLARATION

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16
Q

Date the corporation makes the dividend payment.

A

DATE OF PAYMENT

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17
Q

Date directors specify for identifying stockholders to receive dividends.

A

DATE OF RECORD

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18
Q

Earnings per share calculation that requires dilutive securities be added to the denominator of the basic EPS calculation.

A

DILUTED EARNINGS PER SHARE

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19
Q

Securities having the potential to increase common shares outstanding; examples are options, rights, convertible bonds, and convertible preferred stock.

A

DILUTIVE SECURITIES

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20
Q

Difference between the par value of stock and its issue price when issued at a price below par value.

A

DISCOUNT ON STOCK

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21
Q

Unpaid dividend on cumulative preferred stock; must be paid before any regular dividends on preferred stock and before any dividends on common stock.

A

DIVIDEND IN ARREARS

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22
Q

Amount of income earned by each share of a company’s outstanding common stock; also called NET INCOME PER SHARE.

A

EARNINGS PER SHARE (EPS)

(net income - preferred dividends)/
weighted-average c/s outstanding

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23
Q

Earning a higher return on equity by paying dividends on preferred stock or interest on debt at a rate lower than the return earned with the assets from issuing preferred stock or debt; also called TRADING ON THE EQUITY.

A

FINANCIAL LEVERAGE

24
Q

Stock dividend that is more that 25% of the previously outstanding shares.

A

LARGE STOCK DIVIDEND

25
Q

Distribution of assets that returns part of the original investment to stockholders; deducted from contributed capital accounts.

A

LIQUIDATING CASH DIVIDEND

26
Q

Price at which stock is bought or sold.

A

MARKET VALUE PER SHARE

27
Q

Amount of assets defined by law that stockholders must (potentially) invest in a corporation; usually defined as par value of the stock; intended to protect creditors.

A

MINIMUM LEGAL CAPITAL

28
Q

Preferred stock on which the right to receive dividends is lost for any period when dividends are not declared.

A

NONCUMULATIVE PREFERRED STOCK

29
Q

Preferred stock on which dividends are limited to a maximum amount each year.

A

NONPARTICIPATING PREFERRED STOCK

30
Q

Stock class that has not been assigned a par (or stated) value by the corporate charter.

A

NO-PAR VALUE STOCK

31
Q

Costs such as legal fees and promoter fees to bring an entity into existence

A

ORGANIZATION EXPENSES

32
Q

Total amount of cash and other assets received from stockholders in exchange for stock.

A

PAID-IN CAPITAL or CONTRIBUTED CAPITAL

33
Q

Amount received from issuance of stock that is in excess of the stock’s par value.

A

PAID-IN CAPITAL IN EXCESS OF PAR VALUE

34
Q

Preferred stock that shares with common stockholders any dividends paid in excess of the percent stated on preferred stock.

A

PARTICIPATING PREFERRED STOCK

35
Q

Value assigned a share of stock by the corporate charter when the stock is authorized.

A

PAR VALUE

36
Q

Class of stock assigned a par value by the corporate charter.

A

PAR VALUE STOCK

37
Q

Stockholders’ right to maintain their proportionate interest in a corporation with any additional shares issued,

A

PREEMPTIVE RIGHT

38
Q

Stock with a priority status over common stockholders in one or more ways, such as paying dividends or distributing assets.

A

PREFERRED STOCK

39
Q

Difference between the par value of stock and its issue price when issued at a price above par.

A

PREMIUM ON STOCK or CONTRIBUTED CAPITAL IN EXCESS OF PAR VALUE

40
Q

Ratio of a company’s current market value per share to its earnings per share; also called PRICE-TO-EARNINGS

A

PRICE-EARNINGS (PE) RATIO

market value per share / earnings per share

41
Q

Correction of an error in a prior year that is reported in the statement of retained earnings (or statement of stockholders’ equity) net of any income tax effects.

A

PRIOR PERIOD ADJUSTMENTS

42
Q

Legal document giving a stockholder’s agent the power to exercise the stockholder’s voting rights.

A

PROXY

43
Q

Retained earnings not available for dividends because of legal or contractual limitations.

A

RESTRICTED RETAINED EARNINGS

44
Q

Cumulative income less cumulative losses and dividends.

A

RETAINED EARNINGS

45
Q

Debit (abnormal) balance in Retained Earnings; occurs when cumulative losses and dividends exceed cumulative income; also called ACCUMULATED DEFICIT

A

RETAINED EARNINGS DEFICIT

46
Q

Occurs when a corporation calls in its stock and replaces each share with less than one new share; increases both market value per share and any par or stated value per share.

A

REVERSE STOCK SPLIT

47
Q

Capital structure that consists of only common stock and nonconvertible preferred stock; consists of no dilutive securities.

A

SIMPLE CAPITAL STRUCTURE

48
Q

Stock dividend that is 25% or less of a corporation’s previously outstanding shares.

A

SMALL STOCK DIVIDEND

49
Q

No-par stock assigned a stated value per share; this amount is recorded in the stock account when the stock is issued.

A

STATED VALUE STOCK

50
Q

Financial statement that lists the beginning and ending balances of each major equity account and describes all changes in those accounts.

A

STATEMENT OF STOCKHOLDERS’ EQUITY

51
Q

Corporation’s distribution of its own stock to its stockholders without the receipt of any payment.

A

STOCK DIVIDEND

52
Q

Rights to purchase common stock at a fixed price over a specified period of time.

A

STOCK OPTIONS

53
Q

Occurs when a corporation calls in its stock and replaces each share with more than one new share; decreases both the market value per share and any par or stated value per share.

A

STOCK SPLIT

54
Q

A corporation’s equity; also called SHAREHOLDERS’ EQUITY or CORPORATE CAPITAL.

A

STOCKHOLDERS’ EQUITY

55
Q

Corporation’s own stock that it reacquired and still holds.

A

TREASURY STOCK

56
Q

The annual amount of cash dividends distributed to common shares relative to their market value.

A

DIVIDEND YIELD

annual cash dividends per share / market value per share

Financial Accounting (12 decks)

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