ch 15 MC

common to both stock dividends and stock splits

a change in the number of shares of stock outstanding

when stock is purchased by shareholders' at a price below par:

a contingent liability exists -obligation to the corporations creditors

cumulative preferred dividends in arrears should be shown on a balance sheet as

a footnote

common stock dividends distributable should be recorded as

addition to capital stock outstanding

non cumulative preferred dividends in arrears

are not paid or disclosed

most common preference given to preferred stockholders is'

assured their dividends, before any amount may be given to common stock holders

residual owners

bear the ultimate risks and uncertainties and receive benefits of enterprise ownership

when stock is sold, what happens to contributed capital and earned capital

cc: increases ec: decreases

stockholders equity includes

common stock pic>par cs preferred stock pic>par ps pic - ts retained earnings

what describes the possible treasury stock transactions may _____, but not ______ ________

decrease; increase retained earnings

the declaration and issuance of a stock dividend -

decreases retained earnings, and has no effect on total stock holders equity

general rule for recording stock issued for services/propety

either FMV of stock issued or FMV of the non cash consideration, whichever is more clearly determinable

redeemable preferred stock should be

included as a liability

treasury stock is

included in issued shares

a dividend which is a return to stockholders of a portion of their original investments

liquidating dividend

which disclosure should be made in the equity section of the balance sheet, not the notes

liquidating preferences

additional paid in capital is not affected by the issuance of

no-par stock

cash dividends are paid on the basis of the number of shares

outstanding

"gains" on sales of treasury stock (using the cost method) should be credited to

paid in capital from treasury stock

stock splits effect on: par value per share number of shares outstanding

par value - decreases number of shares - increases

stock that has a fixed per share amount is called

par value stock

what feature of preferred stock makes the security more like debt than an equity instrument

redeemable

reacquisition of treasury stock -

reduces stockholders equity ~~~~~~~you subtract treasury stock

stockholders' of a enterprise are said to be -

residual owners

how does the declaration of a cash dividend effect the following accounts: retained earnings current liabilities cash account

retained earnings: decrease (dr RE) current liabilities: increase (cr div pay) cash: no effect

sale of common stock cash 100 common stock 70 this means

stated value of the common stock (70) is less than the per share price investors were willing to pay (100)

if management wishes to "capitalize" part of the earnings, it may issue a

stock dividend

which dividend does not reduce total stockholders equity

stock dividend

what does not effect stock holders equity

stock dividends stock split

another word for capital of an organization

stockholders' equity

what is NOT a legal restriction related to profit distributions

the amount distributed in one year cannot exceed the net income reported for the year

accounting for stockholders equity is governed by

the business corporation act of the state of incorporation

residual interest belongs to

the common stockholders

organization legal capital is defined as

the par value of all capital stock issued

what is not one of the considerations management must make before a cash dividend is declared

the tax impact on stockholders of the receipt of the dividends

dividends are not paid on

treasury stock

dividends only become a liability when

when they are declared