ch 15 MC
common to both stock dividends and stock splits
a change in the number of shares of stock outstanding
when stock is purchased by shareholders' at a price below par:
a contingent liability exists -obligation to the corporations creditors
cumulative preferred dividends in arrears should be shown on a balance sheet as
a footnote
common stock dividends distributable should be recorded as
addition to capital stock outstanding
non cumulative preferred dividends in arrears
are not paid or disclosed
most common preference given to preferred stockholders is'
assured their dividends, before any amount may be given to common stock holders
residual owners
bear the ultimate risks and uncertainties and receive benefits of enterprise ownership
when stock is sold, what happens to contributed capital and earned capital
cc: increases ec: decreases
stockholders equity includes
common stock pic>par cs preferred stock pic>par ps pic - ts retained earnings
what describes the possible treasury stock transactions may _____, but not ______ ________
decrease; increase retained earnings
the declaration and issuance of a stock dividend -
decreases retained earnings, and has no effect on total stock holders equity
general rule for recording stock issued for services/propety
either FMV of stock issued or FMV of the non cash consideration, whichever is more clearly determinable
redeemable preferred stock should be
included as a liability
treasury stock is
included in issued shares
a dividend which is a return to stockholders of a portion of their original investments
liquidating dividend
which disclosure should be made in the equity section of the balance sheet, not the notes
liquidating preferences
additional paid in capital is not affected by the issuance of
no-par stock
cash dividends are paid on the basis of the number of shares
outstanding
"gains" on sales of treasury stock (using the cost method) should be credited to
paid in capital from treasury stock
stock splits effect on: par value per share number of shares outstanding
par value - decreases number of shares - increases
stock that has a fixed per share amount is called
par value stock
what feature of preferred stock makes the security more like debt than an equity instrument
redeemable
reacquisition of treasury stock -
reduces stockholders equity ~~~~~~~you subtract treasury stock
stockholders' of a enterprise are said to be -
residual owners
how does the declaration of a cash dividend effect the following accounts: retained earnings current liabilities cash account
retained earnings: decrease (dr RE) current liabilities: increase (cr div pay) cash: no effect
sale of common stock cash 100 common stock 70 this means
stated value of the common stock (70) is less than the per share price investors were willing to pay (100)
if management wishes to "capitalize" part of the earnings, it may issue a
stock dividend
which dividend does not reduce total stockholders equity
stock dividend
what does not effect stock holders equity
stock dividends stock split
another word for capital of an organization
stockholders' equity
what is NOT a legal restriction related to profit distributions
the amount distributed in one year cannot exceed the net income reported for the year
accounting for stockholders equity is governed by
the business corporation act of the state of incorporation
residual interest belongs to
the common stockholders
organization legal capital is defined as
the par value of all capital stock issued
what is not one of the considerations management must make before a cash dividend is declared
the tax impact on stockholders of the receipt of the dividends
dividends are not paid on
treasury stock
dividends only become a liability when
when they are declared