Accounting Chapter Eleven
issued shares
actual number of shares sold or distributed to stockholders
dividend payout ratio
annual dividend amount/annual net incomes
categories that number of shares are reported in
authorized, issued, and outstanding
debt financing
borrowing from banks and other creditors
two types of stock
common stock and preferred stock
first item on stockholder's equity portion of the balance sheet
contributed capital
two major components of stockholder's equity
contributed capital and retained earnings
total stockholder's equity=
contributed capital+retained earnings
two methods to account for treasury stock
cost method and par value method
two sources of financing a company
debt and equity
participating
feature which allows the preferred stockholder to receive a dividend in excess of the regular rate when the firm has been particularly profitable
equity financing
issuing stock
convertible preferred stock
may allow stockholders the right to convert the stock into common stock
redeemable preferred stock
may allow stockholders to redeem their stock at a specified price
callable preferred stock
may be callable at the option of the company, the company can chose to pay a specified amount to the stockholders in order to redeem or retire the stock
outstanding shares
number of shares issued less number of shares held as treasury stock
stock dividend
occurs when a corporation declares and issues additional shares of its own stock to existing stockholders
statement of stockholders equity
reflects the difference in the beginning and ending balances for all accounts in the SE category of the BS
market value per share
selling price of the stock as indicated by the most recent transactions
two requirements to declare a cash dividend
sufficient cash must be available and retained earnings must have a sufficient positive balance
additional paid in capital
the amount received at issuance that exceeds par value
contributed capital
the amount the corporation received from the sale of stock to the stockholders
stock split
the creation of additional shares of stock with a reduction of the par value of the stock
authorized shares
the maximum number of shares a corporation may issue
accounts that must be eliminated when stocks are retired
the stock account and the paid-in capital account that were created at issuance
book value per share=
total stockholders equity/numbers of shares of stock outstanding
cumulative stock
unpaid dividends as well as current dividends on preferred stock must be paid before common stock dividends are declared
when does treasury stock occur
when a company repurchases its own stock after issuing it
retirement of stock
when the stock is repurchased with no intention of reissuing at a later date
