LSUS- Acct 701 Module 6

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Earnings Per Share (EPS)

Earnings to the common stockholders on a per share basis, computed as income available to common stockholders divided by the weighted average number of common shares outstanding

Board of Directors

Elected by the stockholders to have primary responsibility for formulating policies for the corporation. Also authorizes contracts, declares dividends, establishes executive salaries, and grants authorization to borrow money.

Callable Preferred Stock

If the stock is nonconvertible, it must be surrendered to the company when the holder is requested to do so. If the stock is convertible, it may be either surrendered or converted into common shared when called.

Treasury Stock

Share of capital stock issued and reacquired by the issuing corporation; they have not been formally canceled and are available for reissuance.

Common Stock

Shares of stock representing the residual equity in the corporation. If only one class of stock is issued, it's known as common stock. All other claims rank ahead of common stockholders' claims

Book value per share

Stockholders' equity per share; the amount per share each stockholder would receive if the corporation were liquidated without incurring any further expenses and if assets were sold and liabilities liquidated at their recorded amounts.

retained earnings

That part of stockholders' equity resulting from accumulated earnings; the account to which the results of corporate activity, including prior period adjustments, are carried and to which dividends and certain items resulting from capital transactions are charged.

Paid-In Capital- Common (preferred) Treasury Stock Transactions

The account credited when treasury stock is reissued for more than its cost; this account is debited to the extent of its credit balance when such shares are reissued at less than cost.

Liquidation Value

The amount a stockholder will receive if a corporation discontinues operations and liquidates by selling its assets, paying its liabilities, and distributing the remaining cash amount the stockholders.

Discount on Capital Stock

The amount by which the par value of shares issued exceeds their issue price. The original issuance of shares at a discount is illegal in most states.

Articles of incorporation

The application for the corporation's charter

Price-Earnings ratio

The current market price per share of common stock divided by EPS

Date of payment (of dividends)

The date of actual payment of a dividend or issuance of additional shares for a stock dividend.

Date of record (of dividends)

The date of record established by the board that determines the stockholders who will receive dividends.

Date of declaration (of dividends)

The date the board of directors takes action in the form of a motion that dividends be paid

Call Premium (on preferred stock)

The difference between the amount at which a corporation calls its preferred stock for redemption and the par value of the stock

Capital Stock Authorized

The number of shares of stock that a corporation is entitled to issue as designated in its charter

Capital Stock Issued

The number of shares of stock that have bee sold and issued to stockholders.

Retained Earnings

The part of stockholders' equity resulting from net income, reduced by dividends and net losses.

Redemption Value

The price per share at which a corporation may call in (or redeem) its capital stock for retirement

Market Value

The prices at which shares of capital stock are bought and sold in the market

Preemptive Right

The right of stockholders to buy additional shares in a proportion equal to the percentage of shares already owned.

Stock Dividend Distributable - Common Account

The stockholders' equity (paid-in capital) account that is credited for the par or stated value of the shares distributable when recording the declarations of a stock dividend

Capital stock

Transferable units of ownership in a corporation

Stock Transfer Agent

Typically, a bank or trust company employed by a corporation to transfer stock between buyers and sellers.

Stock Registrar

Typically, a bank that maintains records of the share outstanding for a company

Shares of Stock

Units of ownership in a corporation

Net-of-tax effect

Used for discontinued operations, extraordinary items, changes in accounting principle, and prior period adjustments, whereby items are shown at the dollar amounts remaining after deducting the effects of such items on income taxes, if any, payable currently

Cumulative Preferred Stock

Preferred stock for which the right to receive a basic divided accumulates if any dividends have not been paid; unpaid cumulative preferred dividends must be paid before any dividends can be paid on the common stock.

Noncumulative preferred stock

Preferred stock on which the right to receive a dividend expires if the dividend is not declared.

Convertible preferred stock

Preferred stock that is convertible into common stock of the issuing corporation

Donated Capital

Results from donation of assets to the corporation, which increases stockholder's equity

Liquidating dividends

Dividends that are a return of contributed capital not a distribution chargeable to retained earnings.

bylaws

A set of rules or regulations adopted by the board of directors of a corporation to govern the conduct of corporate affairs. The bylaws must be in agreement with the laws of the state and the policies and purposes in the corporate charter.

Deficit

A debit balance in the retained earnings account

Stock Split

A distribution of 100% or more of additional shares of the issuing corporation's stock, accompanied by a corresponding reduction in the par value per share. The purpose is to cause a large reduction in the market price per share of the outstanding stock.

Dividend

A distribution of assets (usually cash) that represents a withdrawl of earnings by the owners.

Proxy

A legal document signed by a stockholder, giving another person the authority to vote the stockholder's shares at the stockholders' meeting

Return on Average Common Stockholders' Equity

A measure of the income-producing ability of the company. It is the ratio of net income available to common stockholders divided by average common stockholders' equity.

Stock Certificate

A printed or engraved document serving as evidence that the holder owns a certain number of shares of capital stock

Paid-in Capital

All of the contributed capital of a corporation, including that carried in capital stock accounts.

Paid-In Capital

Amount of stockholders' equity that normally results from the cash or other assets invested by owners; it may also result from services provided for shares of stock and certain other transactions.

Legal Capital (stated Capital)

An amount prescribed by law (usually the par value or stated value of shares issued) below which a corporation may not reduce stockholders' equity through the declaration of dividends or other payment to stockholders.

Stated Value

An arbitrary amount assigned by the board of directors to each share of a given class of no-par stock.

Par Value

An arbitrary amount assigned to each share of a given class of stock and printed on the stock certificate.

Corporation

An entity recognized by law as possessing an existence separate and distinct from its owners; that is, it is a separate legal entity. It is granted many of the rights, and placed under many of the obligations, of a natural person. In any given state, all corporations organized under the laws of that state are domestic corporations; all others are foreign corporations.

Stock Dividends

Dividends that are payable in additional shares of the declaring corporation's capital stock

Unissued Share

Capital Stock authorized but not yet issued.

Preferred Stock

Capital Stock that carries certain features or rights not carried by common stock. May be preferred as to dividends, as to assets, or as to both. May be callable and or convertible and may be cumulative or non cumulative.

No-par Stock

Capital Stock without par value, to which a stated value may or may not be assigned.

Paid-in Capital in excess of par (or stated) value- common or preferred.

Capital contributed to a corporation in addition to that assigned to the shares issued and recorded in capital stock accounts.

Cash Dividends

Cash distributions of accumulated earnings by a corporation to its stockholders

Changes in Account Principles

Changes in accounting methods pertaining to such items as inventory

Prior period adjustments

Consist almost entirely of corrections of errors in previously published financial statements. Reported in the statement of retained earnings net of their tax effects, if any

Stockholders' Ledger

Contains a group of subsidiary accounts showing the number of shares of stock currently held by each stockholder

Organization Costs

Costs of organizing a corporation, such as incorporation fees and legal fees applicable to incorporation.

Dividends in arrears

Cumulative unpaid dividends, including quarterly dividends not declared for the current year

Dividends

Distribution of earnings by a corporation to its stockholders

Extraordinary items

Items both unusual in nature and infrequent in occurrence; reported in the income statement net of their tax effects, if any.

Stock preferred as to assets

Means that in liquidation, the preferred stockholders are entitled to receive the par value (or a larger stipulated liquidation value) per share before any assets may be distributed to common stockholders.

Stock preferred as to dividends

Means that the preferred stockholders are entitled to receive a specified dividend per share before any dividend on common stock is paid.

Income Available to common stockholders

Net income less and dividends on preferred stock

Incorporators

Persons seeing to bring a corporation into existence

statement of retained earnings

a formal statement showing the items causing changes in unappropriated and appropriated retained earnings during a stated period of time.

statement of stockholders' equity

a summary of the transactions affecting the accounts in the stockholders' equity section of the balance sheet during a stated period of time.

Corporate Charter

the contract between the state and the incorporators of a corporation, and their successors, granting the corporation its legal existence.

retained earnings appropriations

contractual or voluntary restrictions or limitations on retained earnings that reduce the amount of dividends that may be declared.

Dividend on preferred Stock

the amount paid to preferred stockholders as a return for the use of their money; usually a fixed or stated amount expressed in dollars per share or as a percentage of par value per share.

Capital Stock Outstanding

the number of shares of authorized stock issued and currently held by stockholders

Minutes Book

the record book in which actions taken at stockholders' and board of directors' meetings are recorded; the written authorization for many actions taken by corporate officers.


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