chapter 10

Investors who acquire preferred stock

1. have preference over commons tock. 2. have preference as to dividends.

advantage of equity financing include that

1. no repayment required 2. dividends are optional

The entry to record the issuance of preferred stock is

1.increase stockholders equity 2.similar to the issuance of common stock

preferred stock generally

HAS preference as to dividends.

a major advantage of the corporate form of ownership is ________ legal liability.

LIMITED

retained earnings are

incr. by net income sometimes called earned capital decreased by dividends

stock dividend

requires a journal entry

The number of shares issued represents the number of shares

sold.

date of record

stock records are finalized to determine which stockholders are to receive payment

the declaration of a dividend results in

increase in dividends increase in liability decrease in retained earnings after temporary accounts are closed.

the effect on the accounting equation of declaring a cash dividend includes

increase liabilities decrease stock. equity

Issuing 1,000 shares of 5%, $100 par value, cumulative preferred stock for $100 cash per share affects the accounting equation by

increase total assets incr. total stock. equity

issuing preferred stock

increases stock.equity similar to issuing common stock.

outstanding shares equals

issued shares-treasury shares

preferred stock carries over common stock

both for dividends and at liquidation

stock splits

cause the par value per share to change

stock splits and stock dividend

cause total se to remain the same

payment date

dividends payable is decreased

AnuU, Inc. sold 100,000 shares of the 1,000,000 shares it is allowed to sell. AnuU repurchased 10,000 of these shares. The number of shares ISSUED equals

100,000 shares

when does a corporation record an increase in dividends payable?

on the declaration date

Outstanding shares equals the number of shares

issued- the number of shares repurchased by the company.

another term for stockholders is

owners

declaration date

the board of directions officials approves a dividend.

When should a corporation record a liability for dividends on its cumulative preferred stock?

when dividends have been declared.