Chapter 11 Terms Flashcards
Authorized stock
The amount of stock that a corporation is authorized to sell as indicated in its charter.
Cash dividend
A pro rata (proportional to ownership) distribution of cash to stockholders.
Charter
A document that describes a corporation’s name and purpose, types of stock and number of shares authorized, names of individuals involved in the formation, and number of shares each individual has agreed to purchase.
Corporation
A company organized as a separate legal entity, with most of the rights and privileges of a person.
Cumulative dividend
A feature of preferred stock entitling the stockholder to receive current and unpaid prior-year dividends before common stockholders receive any dividends.
Declaration date
The date the board of directors formally authorizes the dividend and announces it to stockholders.
Deficit
A debit balance in Retained Earnings.
Dividend
A distribution by a corporation to its stockholders on a pro rata (proportional to ownership) basis.
Dividends in arrears
Preferred dividends that were supposed to be declared but were not declared during a given period.
Legal capital
The amount of capital that must be retained in the business for the protection of corporate creditors.
No-par value stock
Capital stock that has not been assigned a value in the corporate charter.
Outstanding stock
Capital stock that has been issued and is being held by stockholders.
Paid-in capital
The amount stockholders paid in to the corporation in exchange for shares of ownership.
Par value stock
Capital stock that has been assigned a value per share in the corporate charter.
Payment date
The date cash dividend payments are made to stockholders.
Payout ratio
A measure of the percentage of earnings a company distributes in the form of cash dividends to common stockholders.
Preferred stock
Capital stock that has contractual preferences over common stock in certain areas.
Privately held corporation
A corporation that has only a few stockholders and whose stock is not available for sale to the general public.
Publicly held corporation
A corporation that may have thousands of stockholders and whose stock is traded on a national securities market.
Record date
The date when the company determines ownership of outstanding shares for dividend purposes.
Retained earnings
Net income that a company retains in the business.
Retained earnings restrictions
Circumstances that make a portion of retained earnings currently unavailable for dividends.
Stated value
he amount per share assigned by the board of directors to no-par stock.
Treasury stock
A corporation’s own stock that has been reacquired by the corporation and is being held for future use.
