Chapter 10 smartbook 1

Cumulative

Dividends not declared during one year are payable when declared in subsequent periods

Preferred stockholders

have the right to receive dividends only in the years the board of directors declares dividends.

corporate ownership advantages

limited liability and ability to raise capital and transfer ownership

The journal entry to record the resale of treasury stock below cost will result in a debit to cash and:

additional paid in capital

The term "dividends in arrears" refers to preferred stock dividends that are

not paid in a given year

Convertible

Shares can be converted for common stock

No gain or loss is reported when treasury stock is reissued because GAAP does not consider transactions between a corporation and its owners to be profit-making activities.

true

Shareholders' equity consists of which of the following items?

Amounts invested by shareholders Amounts earned by the corporation

disadvantages of corporate

additional taxes, more paperwork

Preferred stock is "preferred" over common stock by providing preferred stock holders with these rights:

first right to specified amount of dividends preference in distribution of assets during dissolution of corporation

When treasury shares are reissued for an amount greater than cost, the amount over the cost increases

additional paid-in capital.

Redeemable

Stocks can be turned in or re-purchased on demand

Investors who acquire preferred stock:

do not have voting rights. have preference as to dividends.

Preferred stock generally (has/does not have) ______ voting rights and (has/does not have) ______ preference as to dividends.

does not have;has

The amount of money paid into a company by its owners is referred to as:

invested capital