Accounting chapter 13
Stated Value Stock
No-par stock to which the directors assign a "stated" value per share
What are the costs of bringing a corporation into existence including legal fees, promoter fees, and amounts paid to the state called...
Organization Expense
Minimum Legal Capital
Par Value x # shares issued
If a company issues 7% preferred stock that has a 100 dollar par value, what does that mean...
it means that the amount of the potential dividend for preferred shareholders is 7 dollars per year, per share.
Stockholders equity consists of two main categories: Contributed Capital Retained earnings
True
The declaration of cash dividends reduces retained earnings...
True
Income of corporations is subject to double taxation first as corporate income and then as personal income the stockholders who receive any cash dividends...
True
Unpaid and undeclared preferred dividends are called dividends
True
Treasury Stock
A corporations required shares.
The day the board of directors votes to pay a dividend is called...
Date of declaration
Stock of a corporation that only has one class of stock is called...
Common Stock
Owners of preferred stock often do not have what...
A) Ownership rights to assets of the corporation B) Preferences to dividends C) Voting rights***** D) The right to sell their stock on the open market E)
Retained Earnings...
A) normally approximates a company's cumulative net income less dividends declared B) Can be subject to statutory restrictions by states C) can be subject to restrictions due to loan agreements D) can be subject to appropriation by the company's board of directors E) All of the above*****
Retained Earnings...
A) normally equals cumulative income less dividends***** B) can only be appropriated by setting aside a cash fund C) represents an amount of cash available to pay shareholders D) Is never adjusted for anything other than income or dividends
Companies use stock dividends...
A) to keep the market price of the stock affordable B) to provide evidence of managements confidence that the company is doing well C) to increase total equity D) Both A & B***** E) All of the above
Minimum Legal Capital is defined as total par value of the shares...
A)Issued***** B)Authorized C)Outstanding D)Subscribed E)
Book value per share is computed by...
Dividing Stockholders Equity by Number of Shares outstanding`
Appropriating retained earnings reduces equity...
False
Authorized stock is the total number of shares outstanding...
False
Common shareholders always share equally with other shareholders in all dividends...
False
Common stock carries a preference for receiving dividends...
False
Corporations are subject to substantially fewer regulations than are proprietorships and partnerships...
False
Par Value is the price the share or stock is bought or sold at...
False
Capital Stock
General term that refers to any shares issued to obtain capital
Callable Preferred Stock
Gives the Issuing corporation the rights to purchase this stock from its holders at specified future prices and dates
Participating Preferred Stock
Has a feature allowing preferred stockholders to share with common stockholders in any dividends paid in excess of the percent or dollar amount stated on the preferred stock
Cumulative Preferred Stock
Has a right to be paid both the current and all prior periods' unpaid dividends before any dividend is paid to common stockholders
The amount of assets defined by state law that stockbrokers must invest and leave invested in the corporation which is intended to protect the creditors of the corporation is called...
Minimum Legal Capital
What is the right of common shareholders to protect their proportionate interest in a corporation by having the first opportunity to buy additional proportionate shares of common stock issued by the corporation called...
Preemptive Right
When a corporation distributes additional shares of its own stock to its shareholders without receiving any payment in return...
Stock Dividend
No-Par Stock
Stock not assigned a value per share by the corporation in its charter
Par-value Stock
Stock that is assigned a par value, which is an amount assigned per share by the corporation in its charter
Authorized Stock
The number of shares that a corporation's charter allows it to sell
Par Value refers to...
The value assigned to a share of stock by the corporate charter
A proxy is a document that gives a designated agent the right to vote according to a shareholders stock...
True
Common Stock
When a corporation has only one class of stock, it is considered Common Stock