chapter 11 reading

Question 1

corporation

Answer 1

entity is seperate from owners and has same rights as person

Question 2

what are owners called in corp

Answer 2

shareholders/stakeholders

Question 3

what are two types of corp

Answer 3

private and public

Question 4

privately held

Answer 4

does not offer its stock for public sale and has few shareholders

Question 5

publicly held

Answer 5

stock for public sale and can have 1000s of shareholders

Question 6

corporate advantages

Answer 6

seperate legal entity
limited liability
transferrable ownership
continuous life
no mutual agency for stockholders
easier capital accumulation

Question 7

no mutual agency for shareholders means

Answer 7

shareholders can not bind corporation to contracts - lack of mutual agency

Question 8

easier capital accumulation

Answer 8

buying stock is attractive to investors b/c advantages above when helps corp collect large sums of money

Question 9

corporate disadvantages

Answer 9

govnt regulation
corp taxation

Question 10

organization expense

Answer 10

cost to start corp ie legal fees and payments for charter

Question 11

how does organization expense record

Answer 11

records (debits) these costs to org expense org. costs are expense as incurred

Question 12

corp structure

Answer 12

1)stockholder
2)board of directors
3)pres,VP +other
4)employees of the corp

Question 13

whats it called when corp has only one class of stock

Answer 13

common stock

Question 14

capital stock

Answer 14

shares issued to obtain capital (owner financing)

Question 15

authorized stock

Answer 15

of shares corp charter allows it to sell

Question 16

when would authorized issued outstanding show a decline

Answer 16

shows a decline in shares issued if company buys back its issued stock

Question 17

market value per share

Answer 17

price at which stock is bought and sold

Question 18

what infleunces market value

Answer 18

dividends, growth, economy

Question 19

par value stock

Answer 19

stock that has par value whihc is amount assigned per share by corp in its charter

Question 20

in many states wjat does par value establish

Answer 20

minimum

Question 21

legal capital

Answer 21

least amount that buyers of stock must contribute to corp or be at risk to pay creditors at future date

Question 22

no par value stock

Answer 22

stock not assigned an amount per share by corporation charter no min legal capital

Question 23

stated stock valuee

Answer 23

no par stock that has assigned state value per share

Question 24

corps equity is called

Answer 24

stockholder equity

Question 25

paid in capital

Answer 25

total amount of cash and other assets the corp receives from stockholdr in exchange for stock

Question 26

retaiend earnings

Answer 26

cumulative net income and loss not distributed as dividends to its tockholder

Question 27

how can par value stock be issued

Answer 27

at par, above or below

Question 28

when does premium on stock occur

Answer 28

when corp sells its stock for more than par value

Question 29

cash dividends

Answer 29

dist or cash to stockholder

Question 30

stock dividend

Answer 30

delcared by corp directors, dist of additional shares of its own stock to its stockholders w/out any payment in return

Question 31

preferred stock

Answer 31

special reights that give it priority over common stock in more than one area

Question 32

restrcited referred earnings

Answer 32

contractural restrictions

Question 33

appropraited retained earnings

Answer 33

voluntary trasnfer of amounts from retained earning account to appropriated retained earnings to inform users of special activities that require funds

Question 34

basic earnings per share formula

Answer 34

(net income - preferred dividends)/weighted avg common shares outstanding