F:13 Corporations Flashcards
Appropriation of Retained Earnings
Restriction of a portion of retained earnings that is recorded by a journal entry
a restriction of a portion of retained earnings
Authorized Stock
The maximum number of shares of a stock that the corporate charter allows the corporation to issue
Capital Stock
the individual’s ownership of the corporation’s capital
Common Stock
represents the basic ownership of a corporation
Corporation
A business organized under state law that is a separate legal entity
Cumulative Preferred Stock
Preferred stock whose owners must receive all dividends in arrears plus the current year dividend before the corporation pays the dividends to the common stockholders
a type of preferred stock with a provision that if any dividend payments have been missed in the past, the dividends owed must be paid out to cumulative preferred shareholders first
Deficits
Debit balance in the Retained Earnings account
Dividend
a distribution of a corporation’s earnings to stockholders
Dividend in Arrears
A preferred stock dividend is in arrears if the dividend has not been paid for the year and the preferred stock is cumulative
Earnings Per Share (EPS)
(EPS) Amount of a company’s net income (loss) for each share of its outstanding common stock
(Net income - Preferred dividends) / Weighted average number of common shares outstanding
Income tax expense
Expense incurred by a corporation related to federal and state income taxes
Issued stock
Stock that has been issued but may or may not be held by stockholders
Issue Price
The amount that the corporation receives from issuing stock
Large Stock Dividend
A stock dividend greater than 20% to 25% of the issued and outstanding stock
Legal Capital
The portion of stockholders equity that cannot be used for dividends
Memorandum Entry
An entry in the journal that notes a significant event, but has not debit or credit amount
Noncumulative Preferred Stock
Preferred stock whose owners do not receive passed dividends
No-Par Stock
Stock that has no amount (par) assigned to it
Outstanding Stock
Issued stock in the hand of the stockholders
Paid-In Capital
Represents amounts received from the stockholders of a corporation in exchange for stock
Paid-In Capital in Excess of Par
Represents amounts received from stockholders in excess of par value
Par Value
An amount assigned by a company to a share of its stock
Preemptive Right
Stockholder’s right to maintain their proportionate ownership in the corporation
Preferred Stock
Stock that gives its owners certain advantages over common stockholders, such as the right to receive dividends before the common stockholders and the right to receive assets before the common stockholders if the corporation liquidates
Premium
The amount above par at which a stock is issued
Price/Earnings Ratio
The ratio of the market price of a common stock to the company’s earnings per share. Measures the value that the stock market places on a $1 of the company’s earnings. Market price per share of common stock / Earnings per share
Prior-Period Adjustment
A correction to retained earnings for an error of an earlier period
Rate of Return on Common Stockholders Equity
Shows the relationship between net income availiable to common stockholders and their average common equity invested into the company
(Net income - Preferred dividends) / Average common stockholder’s equity
Retained Earnings
Equity earned by profitable operations of a corporation that is not distributed to stockholders
Small Stock Dividends
A stock dividend of less than 20% to 25% of the issued and outstanding stock
Stated Value Stock
No-par stock that has been assigned an amount similar to par value
Stock Certificate
Paper evidence of ownership in a corporation
Stock Dividend
A distribution by a corporation of its own stock to its stockholders
Stockholders Equity
A corporation equity that includes paid-in capital and retained earnings
Stock Split
An increase in the number of issued and outstanding shares of stock coupled with a proportionate reduction in the par value of the stock
Treasury Stock
A corporation’s own stock that it has previously issued and later reacquired
Underwriter
A firm that handles the issuance of a company’s stock to the public, usually assuming some of the risk by agreeing to buy the stock if the firm cannot sell all of the stock to its clients
