Chapter 11 Terms

Question 1

Organizational Expenses

Answer 1

Cost to start a corporation

Question 2

Authorized Stock

Answer 2

Number of shares a corporation’s charter allows it to sell

Question 3

Premium on Stock

Answer 3

Occurs when a corporation sells it stock for more than par value

Question 4

Cash Dividend

Answer 4

distributions of cash to stockholders

Question 5

Stock Dividends

Answer 5

A distributions of a corporations own stock to its stockholders without any payment in return

Question 6

Small Stock Dividends

Answer 6

25% or less (uses mearket value)

Question 6

Large Stock Dividends

Answer 6

More than 25% (uses par value)

Question 6

Stock Split

Answer 6

a distribution of additional shares to stockholders according to their percent ownership

Question 6

Preferred Stock

Answer 6

Has special rights over common stock in one or more areas.

Question 7

Cumulative Preferred Stock

Answer 7

Gives owner special rights to be paid the current all prior periods

Question 8

Noncumulative Preferred Stock

Answer 8

Does not give the right to prior unpaid dividends

Question 9

Treasury Stock

Answer 9

When a company buys back their own stock

Question 10

Statement of Stockholder’s Equity

Answer 10

Lists the beginning and ending balances of key equity accounts and describes the changes that occurred during that period

Question 11

Earnings per Share

Answer 11

(net income - preferred dividends) / Weighted-average common shares outstanding

Question 12

Price-earning Ratio

Answer 12

Market Value (price per share) / earnings per share