Econ 3B Chapter 11 Wiley

Acer Corporation recently distributed stock dividends. What is a likely reason for this decision?

Acer Corporation wishes to appease common stockholders, and sufficient cash is not available to pay cash dividends.

The difference between the number of shares issued and the number of treasury shares is the number of

outstanding shares

Dividends are legally distributed from retained earnings but are forbidden in some states are to be paid out of

paid-in capital

Which two items comprise the major components of stockholders' equity on the corporate balance sheet?

paid-in capital and.retained earnings

The additional paid-in capital appears under the

paid-in capital subsection in the balance sheet under stockholder's equity

How do you calculate net income?

preferred dividends plus average common stockholder's equity times the return on common stockholder's equity

Private companies are exempt from

issuing reports to the SEC

Return on stockholder's equity

net income-preferred dividend)/average common stockholders' equity

Treasury stock is

accounted for at cost

Paid-in capital is the

amount paid in to the corporation by stockholders in exchange for shares of ownership

Paid-in capital in excess of stated value would appear under the category additional paid-in capital on a(n)

balance sheet

Which provision is followed by all states?

cash dividends may be paid out of retained earnings

Which accounts are ultimately affected by a small stock dividend

common stock, paid-in capital in excess of par—common stock, and retained earnings.

Total paid-in capital

consists of the par value of the stock issued plus any additional paid-in capital

How does a company determine which stockholders are entitled to a dividend?

the investors who hold stock on the record date will receive a dividend

Total paid-in capital consists of

the par value of stock issued plus any additional paid in capital

Additional paid-in capital is calculated as

total stockholder's equity-preferred stock at par value-common stock at par value-retained earnings

Which of the following is listed under the total paid-in capital and retained earnings section of the balance sheet?

treasury stock

Which amounts will reduce stockholders equity?

treasury stock and a retained earnings deficit

In exchange for dividend preferences, preferred stockholders often relinquish?

voting rights