Chapter 7

Question 1

Equity financing activities

Answer 1

Raising capital by issuing common stock and preferred stock, the return of capital by issuing dividends to shareholders, share repurchases, and the use of equity to compensate employees via stock options

Question 2

3 primary events that change the the book value of shareholders equity are:

Answer 2

Investments by shareholders, usually net cash received by the company at equity issue date

Distributions to shareholders usually in the form of periodic cash dividend payments to investors and or share repurchases

Profitable operating and investing activities primarily consisting of net income but also other comprehensive income