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