Accounting final exam

Stock splits

an action by a company that gives stockholders two or more shares of stock for each one they own(increase the total number of shares outstanding)

retained earnings

Represents the total earnings retained in the company after dividends have been disbursed

How are stock dividend and stock split different

Stock Split A stock dividend occurs when the company uses the amount of money that would be paid as a cash dividend to purchase additional common shares for the shareholder. A stock split happens when a company issues two or more new shares for every existing share an investor holds.

Issued Stock

the number of shares sold to investors; includes treasury shares

Stock dividends and stock splits have the following effects on retained earnings

no change in stock splits and a decrease in stock dividends

outstanding shares

shares of stock issued and not bought back by the corporation

preferred stock

stock that entitles the holder to a fixed dividend, whose payment takes priority over that of common-stock dividends.

authorized stock

the maximum number of shares that a corporation may issue is referred to as

common stock

the most basic form of ownership, including voting rights on major issues, in a company

A stock dividend

transfers shares of stock from the corporation to its stockholders -- additional shares of the corporation's own stock

What are the four rights of a common stockholder

vote, participate in profit, preemptive right, residual claim