Financial Accounting Final 2015

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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


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