ACC CH10
two equity accounts
Common Stock at the par value or stated value per share and Additional Paid-in Capital for the portion above par or stated value
Declaring stock dividends and stock splits
Everyone has more shares, but each share is worth proportionately less than before.
. Retained earnings
Increases stockholders' equity.
What effect does a stock dividend have on total stockholders' equity
No effect on total stockholders' equity
The correct order from the largest number of shares to the smallest number of shares is:
Outstanding, issued, and authorized
Which of the following summarizes the changes in the balance in each stockholders' equity account over a period of time
The statement of stockholders' equity
The dividend yield measures how much
a company pays out in dividends in relation to its stock price
The primary disadvantages are
additional taxes and more paperwork.
Some preferred stock is cumulative, meaning
any dividends not declared in a given year accumulate to be paid in a later year
The stockholders' equity section of the balance sheet presents the balance of each equity account
at a point in time
The statement of stockholders' equity shows the change in each equity account
balance over time
Return on Equity is measured by
calculated as net income divided by average stockholders' equity
The payment of cash dividends
decreases Dividends Payable and decreases Cash
The declaration of cash dividends
decreases Retained Earnings and increases Dividends Payable
When we resell treasury stock, we report the
difference between its cost and the cash received as an increase or decrease in additional paid-in capital
The return on equity measures the ability to
generate earnings from the owners' investment
The net effect, then,
is a reduction in both Retained Earnings and Cash.
The primary advantages of the corporate form of business are
limited liability and the ability to raise capital
Earnings per share measures the
net income earned per share of common stock
Preferred stock has preference over common stock in
receiving dividends and in the distribution of assets in the event the corporation is dissolved
Entries for cash dividends are recorded on all of the following dates except
record date
The price-earnings ratio indicates how the
stock is trading relative to current earnings.
We include treasury stock in the
stockholders' equity section of the balance sheet as a reduction in stockholders' equity
If no-par value stock is issued
the corporation debits Cash and credits two equity accounts