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acc 122 > Exam 1 > Flashcards

Exam 1 Flashcards

1
Q

The amount of stock that a corporation is authorized to sell as indicated in its charter.

A

Authorized Stock

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2
Q

A document that is issued by the state to set forth important terms and features regarding the creation of a corporation.

A

Charter

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3
Q

A business organized as a legal entity separate and distinct from its owners under state corporation law.

A

Corporation

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4
Q

Capital stock that has not been assigned a value in the corporate charter.

A

No-par value stock

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5
Q

Costs incurred in the formation of a corporation

A

Organization costs

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6
Q

Capital stock that has been issued and is being held by stockholders

A

Outstanding stock

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7
Q

Total amount of cash and other assets paid in to the corporation by stockholders in exchange for capital stock.

A

Paid-in capital

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8
Q

Capital stock that has been assigned a value per share in the corporate charter.

A

Par value stock

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9
Q

Capital stock that has some preferences over common stock.

A

Preferred stock

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10
Q

A corporation that has only a few stockholders and whose stock is not available for sale to the general public.

A

Privately held corporation

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11
Q

A corporation that may have thousands of stockholders and whose stock is regularly traded on a national securities exchange.

A

Publicly held corporation

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12
Q

Net income that the corporation retains for future use.

A

Retained earnings

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13
Q

The amout per share assigned by the board of directors to no-par value stock

A

Stated value

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14
Q

A corporation’s own stock that has been issued and subsequently reacquired from shareholders by the corporation but not retired.

A

Treasury stock

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15
Q

The equity a common stockholder has in the net assets of the corporation from owning one share of stock.

A

Book value per share

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16
Q

A pro rata distribution of cash to stockholders

A

Cash dividend

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17
Q

A feature of preferred stock entitling the stockholder to receive current-year and any unpaid prior-year dividends before common stockholders are paid dividends.

A

Cumulative dividend

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18
Q

The date the board of directors formally declares (authorizes) a dividend and announces it to stockholders.

A

Declaration date

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19
Q

A debit balance in retained earnings.

A

Deficit

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20
Q

A corporation’s distribution of cash or stock to its stockholders on a pro rata (proportional) basis.

A

Dividend

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21
Q

The net income earned by each share of outstanding common stock.

A

Earnings per share (EPS)

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22
Q

A dividend declared out of paid-in-capital.

A

Liquidating dividend

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23
Q

The date dividends are transferred to stockholders.

A

Payment date

24
Q

The percentage of earnings a company distributes in the form of cash dividends to common stockholders and is computed as cash dividends declared on common stock divided by net income.

A

Payout ratio

25
Q

The correction of an error in previously issued financial statements.

A

Prior period adjustment.

26
Q

The date when ownership of outstanding shares is determined for dividend purposes.

A

Record date

27
Q

Net income that a company retains in the business.

A

Retained earnings

28
Q

Circumstances that make a portion of retained earnings currently unavailable for dividends.

A

Retained earnings restrictions

29
Q

A statement that shows the changes in retained earnings during the year.

A

Retained earnings statement.

30
Q

A measure of profitabiity that shows how many dollars of net income were earned for each dollar invested by the owners; computed as net income minus preferred dividends divided by average common stockholders’ equity.

A

Return on common stockholders’ equity

31
Q

A pro rata distribution to stockholders of hte corporation’s stock.

A

Stock dividend

32
Q

A statement that shows the changes in each stokholders’ equity account and in total stockholders’ equity during the year.

A

Stockholders’ equity statement

33
Q

The issuance of additional shares of stock to stockholders according to their percentage ownership. It is accompanied by a reduction in the par or stated value per share.

A

Stock split

34
Q

A legal document thta indicates the name of the issuer, the face value of the bonds, the contractual interest rate, and maturity date of the bonds.

A

Bond Certificate

35
Q

A legal document that sets forth the terms of the bond issue.

A

Bond indenture

36
Q

A form of interest-bearning notes payable issued by corporations, universities, and governmental entities.

A

Bonds

37
Q

Bonds that are subject to redemption (buy back) at a stated dollar amount prior to maturity at the option of the issuer.

A

Callable bonds

38
Q

Rate used to determine the amount of cash interest the borrower pays and the investor receives.

A

Contractual interest rate

39
Q

Bonds that permit bondholders to convert them into common stock at the bondholders’ option.

A

Convertible bonds

40
Q

Bonds issued against the general credit of the borrower. Also called unsecured bonds.

A

Debenture bonds

41
Q

A solvency measure that indicates the percentage of total assets provided by creditors; computed as total liabilities divided by total assets.

A

Debt to asset ratio

42
Q

The difference between the face value of a bond and its selling price, when the bond is sold for less than its face value.

A

Discount (on a bond)

43
Q

Amortization of bond discount or bond premium which results in periodic interest expense equal to a constant percentage of the carrying value of the bonds

A

Effective-interest method of amortization

44
Q

Rate established when bonds are issued that maintains a constant value for interest expense as a percentage of bond carrying value in each interest period.

A

Effective-interest rate

45
Q

Amount of principal due at the maturity date of the bond.

A

Face value

46
Q

Obligations expected to e paid more than one year in the future.

A

Long-term liabilities

47
Q

The rate investors demand for loaning funds to the corporation.

A

Market interest rate

48
Q

The date on which the final payment on the bond is due from the bond issuer to the investor.

A

Maturity date

49
Q

A bond secured by real estate.

A

Mortgage bond

50
Q

A long-term note secured by a mortgage that pledges title to specific assets as security for a loan.

A

Mortgage notes payable

51
Q

The difference between the selling price and the face alue of a bond, when the bond is sold for more than its face value.

A

Premium (on a bond)

52
Q

Bonds that have specific assets of the issuer pledged as collateral.

A

Secured bonds

53
Q

Bonds secured by specific assets set aside to redeem them.

A

Sinking fund bonds

54
Q

Allocates the same amount to interest expense in each interest period.

A

Straight-line method of amortization

55
Q

A solvency measure that indicates a company’s ability to meet interest payments; computed by dividing the sum of net income, interest expense, and income tax expense by interest expense.

A

Times interest earned

56
Q

The relationship between time and money. A dollar received today is worth more than a dollar promised at some time in the future.

A

Time value of money

57
Q

Bonds issued against the general credit of the borrower. Also called debenture bonds.

A

Unsecured bonds.

acc 122 (4 decks)

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