Financial Accounting Final 2015
Corporation
A business that is organized as a separate legal entity with limited liability for it's owners
Reason for Stock Split
Cause the market price per share to decline
Stock Split Characteristic
Cause the par value per share to change
Stock Split and Stock Dividends Characteristic
Cause total stockholders equity to remain the same
When is dividends payable recorded on as a credit?
Declaration date
Stock Dividend
Distributes additional shares of stock to existing stockholders on a pro rata basis at no cost to the stockholders
Shareholder's equity
Ownership interests of the shareholders
Dividends in Arrears
Unpaid dividends on cumulative preferred stock
Dividends Payable is...
A liability account with a normal credit balance and is recorded on the date of declaration
Occurs on the date of record
A list of shareholder that are entitled to receive a dividend is made.
Example of a stockholders equity account...
Additional paid in capital
Shareholder's equity consists of...
Amounts invested by shareholders AND amounts earned by the corporation
Net Losses
An accumulated deficit in retained earnings indicated that the company has ...
Special Contractually granted features can make preferred stock:
Convertible, redeemable, and cumulative
When a corporation issues common stock for an amount above par, which entities occur?
Credit to additional paid-in capital AND credit to common stock
What does retained earnings represent by the business?
Cumulative profits retained AND cumulative net income kept
Stock Divided / Stock Split
Distributions of stock to current stockholders of a corporation
Preferred Stock
Has preferences over commons stocks AND is useful for raising capital without reducing common stockholder's control AND generally does not have voting rights
Preferred Stock (pros)
Has priority over common stocks when dividends are declared AND has priority of common stock at liquidation
Outstanding Common Shares
Only common shares that are eligible to receive dividends
Corporation types
Public AND Private
Stock Dividends Characteristic
Require a journal entry
Dividends declared goes where at the end of the fiscal year?
Retained Earnings
Earned Capital
Retained Earnings
Treasury Stock
Shares of stock previously sold by the corporation that are repurchased AND the contra account used to record a company's repurchase of its own commons stock
Balance Sheet
Shows the balance of each equity account at a specific point of time
Retained Earnings
A corporation's accumulated income that has been distributed as dividends to shareholders AND a company's past profits that are kept instead of being paid to stockholders
Example of Stock Dividend
A distribution of additional shares of a corporation's stock to current stockholders of the corporation
What is a frequent reason for a stock split?
Causes the market price per share to decline
Private Corporation
Closely held with few owners
Invested Capital
Common Stock
Public Corporation
Is available to any investor who wants to purchase shares of stock on the stock exchange
Who is a corporation owned by?
It's Stockholders
Limited Liability
Most important advantage to the corporate form of business
Statement of Stockholders Equity
Shows the change in the account balance of each equity account over time
Investors earn a return on stock investments by...
receiving dividends AND selling the stock for more than it costs
