Chapter 13

Question 1

Restriction of a portion of retained earnings that is recorded by a journal entry

Answer 1

Appropriation of Retained Earnings

Question 2

Maximum number of shares of stock that the corporate charter allows the corporation to issue

Answer 2

Authorized Stock

Question 3

Represent’s the individual’s ownership of the corporation’s capital

Answer 3

Capital Stock

Question 4

Represents the basic ownership of a corporation

Answer 4

Common Stock

Question 5

Blank stock whose owner must receive all dividends in arrears plus the current year dividend before the corporation pays dividends to common stockholders

Answer 5

Cumulative Preferred Stock

Question 6

Debit balance in the Retained Earnings account

Answer 6

Deficit

Question 7

Amount below par at which a stock is issued

Answer 7

Discount

Question 8

Distribution of a company’s earnings to stockholders

Answer 8

Dividend

Question 9

If cumulative dividend has not been paid for the year

Answer 9

Dividend in Arrears

Question 10

Amount of a company’s net income for each share of its outstanding common stock

Answer 10

Earnings per Share

Question 11

Price the stock initially sells for the first time it is sold

Answer 11

Issue Price

Question 12

Stock the has been distributed but may or may not be held by stockholders

Answer 12

Issued Stock

Question 13

Stock dividend great than 20% - 25% of the issued and outstanding stock

Answer 13

Large Stock Dividend

Question 14

Portion of stockholders’ equity that cannot be used for dividends

Answer 14

Legal Capital

Question 15

Entry in the journal that notes a significant event but has no debit or credit amount

Answer 15

Memorandum Entry

Question 16

Stock that has no amount assigned to it

Answer 16

No-Par Stock

Question 17

Preferred stock whose owners do not receive passed dividends

Answer 17

Noncumulative Preferred Stock

Question 18

Issued stock in the hands stockholders

Answer 18

Outstanding Stock

Question 19

Amounts received from the stockholders of a corporation in exchange for stock

Answer 19

Paid-In Capital

Question 20

Amounts received from stockholders in excess of par value

Answer 20

Paid-In Capital in Excess of Par

Question 21

Amount assigned by a company to a share of its stock

Answer 21

Par Value

Question 22

Stockholder’s ability to maintain their proportionate ownership in the corporation

Answer 22

Preemptive Right

Question 23

Stock that gives owners certain advantages over other stockholders

Answer 23

Preferred Stock

Question 24

Amount above par at which stock is issued

Answer 24

Premium

Question 25

Ratio of market price of a share of common stock to the company’s earnings per share

Answer 25

Price/Earnings Ratio

Question 26

Correction to Retained Earnings for an error of an earlier Period

Answer 26

Prior-Period Adjustment

Question 27

Relationship between net income available to common stockholders and their average common equity invested in the company

Answer 27

Rate of Return on Common Stockholders’ Equity

Question 28

Capital earned by profitable operation of a corporation that is not distributed to stockholders

Answer 28

Retained Earnings

Question 29

Stock dividend of less than 20%-25% of the issued and outstanding stock

Answer 29

Small Stock Dividend

Question 30

No-par stock that has been assigned an amount similar to par value

Answer 30

Stated Value Stock

Question 31

Paper evidence of ownership in a corporation

Answer 31

Stock Certificate

Question 32

Corporation’s equity that includes paid-in capital and retained earnings

Answer 32

Stockholders’ Equity

Question 33

Corporation’s own stock that is has previously issued and later reacquired

Answer 33

Treasury Stock

Question 34

Firm that handles the issuance of a company’s stock to the public, assuming some risk to buy the stock if it cannot be sold

Answer 34

Underwriter