Chapter 13: Corportations

Question 1

Corporation

Answer 1

A legal entity, distinct and separate from the individuals who create and operate it.

Question 2

Stock

Answer 2

Shares of ownership of a corporation.

Question 3

Stockholders

Answer 3

The owners of a corporation

Question 4

Limited Liability

Answer 4

This means that creditors usually may not go beyond the assets of the corporation to satisfy their claims

Question 5

articles of incorporation

Answer 5

The articles of incorporation formally create the corporation

Question 6

application of incorporation

Answer 6

First step in forming a corporatoins

Question 7

stockholders’ equity,

Answer 7

The Owner’s equity in a corporatoin

Question 8

Paid-In-Capital

Answer 8

Capital contributed to a corporation by the stockholders and others.

Question 9

Retained Earnings

Answer 9

Net income retained in a corporation.

Question 10

Dividends

Answer 10

Distribution of a corporation’s earnings to stockholders.

Question 11

Deficit

Answer 11

A debit balance in the retained earnings account.

Question 12

Authorized Stock

Answer 12

Number of Shares of stock a corporation is allowed to issue to its stock holders, as stated in its articles of incorporation.

Question 13

Outstanding stock

Answer 13

The stock in the hands of stockholders.

Question 14

Par Value

Answer 14

A dollar amount assigned to each share of stock.

Question 15

Common Stock

Answer 15

The stock outstanding when a corporation has issued only one class of stock.

Question 16

Preferred Stock

Answer 16

A class of stock with preferential rights over common stock.

Question 17

Cumulative Preferred Stock

Answer 17

Stock that has a right to receive regular dividends that were not declared

Question 18

In Arrears

Answer 18

Cumulative preferred stock dividends that have not been paid in prior years are said to be in arrears.

Question 19

Premium

Answer 19

The excess of the issue price of a stock over its par value or the excess of the issue price of bonds over their face amount.

Question 20

Discount

Answer 20

The interest deducted from the maturity value of a note or the excess of the face amount of bonds over their issue price.

Question 21

Cash Dividends

Answer 21

A cash distribution of earnings by a corporation to its shareholders.

Question 22

Date of Decleration

Answer 22

the date the board of directors formally authorizes the payment of the dividend.

Question 23

Date of Record

Answer 23

the date the corporation uses to determine which stockholders will receive the dividend.

Question 24

Date of Payment

Answer 24

the date the corporation will pay the dividend to the stockholders who owned the stock on the date of record.

Question 25

Stock Dividend

Answer 25

A distribution of shares of stock to its stockholders.

Question 26

Stock Split

Answer 26

A reduction in the par or stated value of a common stock and the issuance of a proportionate number of additional shares.

Question 27

Treasury Stock

Answer 27

Stock that a corporation has once issued and then reacquires.

Question 28

Retained Earnings Statement

Answer 28

A summary of the changes in the retained earnings in a corporation for a specific period of time, such as a month or a year.

Question 29

Restrictions

Answer 29

Amounts of retained earnings that have been limited for use as dividends.

Question 30

Prior Period Adjustment

Answer 30

Corrections of material errors related to a prior period or periods, excluded from the determination of net income.

Question 31

Statement of Stockholder’s Equity

Answer 31

A summary of the changes in the stockholders’ equity in a corporation that have occurred during a specific period of time.

Question 32

Earnings Per Share

Answer 32

Net income per share of common stock outstanding during a period.