Chpt. 15 Definitions

Public Corporations

A company owned or operated by governmental units

Closed Corporations

A company that do not allow the sale of stock to the general public. Stock is usually held by a few shareholders

Open Corporations

A company whose stock can be purchased by any individual on a stock exchange

Retained Earnings

Any net income that has been reinvested in the corporation and not paid out to shareholders as dividends

Articles of Incorporation or Corporate Charter

Approved application

Exercise price (strike price)

Established price, the price at which the holder of a warrant has the right to buy or sell the common stock

Liquidation Preference

If a corporation is liquidated, the preferred stock contract usually allows the preferred shareholder to have a ....

Investors

Individuals Other corporations mutual funds trust/pension funds banks insurers other types of entities

Nonmonetary Exchange

Issuance of Capital Stock for assets other than cash or for services performed

Contributed Capital

Made up of capital stock accounts and additional paid in capital accounts

Dividends in arrears

Not a liability until the dividend declaration A corporation fails to declare a dividend on cumulative preferred stock at the stated rate on the usual dividend date, the amount becomes ...

Shareholders/Stockholders

Owners of a company that is structured as a corporation

Stock Certificate

Ownership in a corporation is represented by this serially numbered document that indicates the number of shares owned and the par value (if any).

Shareholder Rights

Right to dividend when it is declared right to elect directors and to establish corporate policies right to maintain a proportionate interest in the ownership of the corporation by purchasing a proportion share of additional capital stock if more stock is issued Right to share in the distribution of the assets of the corporate if it is liquidated

Limited Legal Liability

Shareholders bear no personal liability for the corporation's debts and risk, only their capital investment

Accumulated Other Comprehensive Income

Shareholders' equity may increase or decrease as a result of other comprehensive income and reports it this element of capital structure here

Primary advantage of the corporate

The ability to raise large amounts of capital by issuing shares of stock

Additional Paid in Capital

The account to identify, measure, and record the excess value received over par value Also Called: Capital in excess of Par (or Stated) Value Paid in capital in excess of par (or stated) value Additional Capital

Legal Capital

The amount of shareholders' equity that the corporation cannot distribute to shareholders Par value per share X number of shares issued

Treasury Stock

The number of shares of capital stock that a corporation has issued to and reacquired from shareholders but not retired. The difference between the number of issued shares and the number of outstanding shares

Subscribed Capital Stock

The number of shares of capital stock that a corporation will issue upon the completion of an installment purchase contract with an investor

Equity

The ownership interest that arises from owners' investments in the company

FASB Statement of Financial Accounting Concepts No. 6 Definition of Equity

The residual interest in the assets of a company that remains after deducting its liabilities. assets - liabilities = ?

No-Par Capital Stock

This stock does not carry a par value

Detachable Warrants

Warrants may be issued separately or in conjunction with other securities, such as a bond or preferred stock

Domestic Corporations

When viewed by a state, companies doing business in the state in which it is incorporated. When viewed at the national level, companies doing business in the country in which it is incorporated

Foreign Corporations

When viewed by a state, companies that are operating in a state other than the one in which it is incorporated in. When viewed at the national level, companies that are incorporated in one country and operate in another country.

Par Value

a designated dollar amount per share that is established in the articles of incorporation and is printed on each stock certificate

Corporation

a legal entity of a particular state

Privately Held Corporation

businesses not owned by the government, include stock companies that issue shares of stock to shareholders and operate for profit, and also nonstock companies that do not operate for profit

Common Stock

capital stock that carries all of the rights of ownerships When a corporation issues only one class of capital stock

reverse Stock split

increase the par value per share and proportionally decreases the number of shares issued

Callable Preferred Stock

may be retired (recalled) under specified conditions by a corporation at its discretion

Application Requirements

names of the individual incorporators corporate name, address, and nature of business types, par value, and number of shares of capital stock to be issued any other information required by the state's law

Noncumulative preferred stock

never be paid a dividend for that year

Cumulative Preferred Stock

paid a dividend for previous years

Participating Preferred Stock

preferred shareholders share with the common shareholders in any additional dividends

Stock Split

proportionally decreasing market price and the par value per share of stock and increases the number of shares issued

Pro Rata

proportionate share of additional capital stock if more stock is issued

Warrants

represent rights that allow the holder to purchase addition shares of common stock at a specified price over some future period

Stock Warrants

represent the right to purchase additional shares of common stock at an established price

Pre-emptive rights

right to maintain a proportionate interest in the ownership of the corporation by purchasing a proportion share of additional capital stock if more stock is issued

Fully participating preferred shareholders

share equally with the common shareholders in any extra dividends

Partially Participating Preferred shareholders

share in extra dividends, but this participation is limited to a fixed rate or amount per share

Preferred Stock

stock in exchange for certain other privileges, usually is not granted all of the common stock's right

Redeemable preferred stock

subject to mandatory redemption at a specified future maturity date for a specified price or redeemable at the option of the holder

Stated Value

the corporate board of directors gets to establish this price per share of no par stock

Issued capital Stock

the number of shares of capital stock that a corporation has issued to its shareholders as of a specific date

Outstanding Capital stock

the number of shares of capital stock that a corporation has issued to shareholders that are still being held by shareholders as of a specific date

Authorized Capital Stock

the number of shares of capital stock that a corporation may issue as stated in its corporate charter

Voting Rights

the right to elect directors and to establish corporate policies

Capital Stock

the shares of stock issued by the corporation and owned by its shareholders