Chapter 15-Stockholder's Equity Flashcards Preview

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Flashcards in Chapter 15-Stockholder's Equity Deck (36)
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1
Q

Additional paid-in capital

A

The excess over par value paid in by stockholders in return for the shares issued to them.

2
Q

Callable preferred stock

A

Preferred stock that grants the issuer the right to purchase the stock from stockholders at specified future dates and prices.

3
Q

Cash dividend

A

When a corporation distributes a dividend in cash to the stockholders.

4
Q

Common stock

A

The residual corporate interest that bears the ultimate risks of loss and receives the benefits of success.

5
Q

Contributed capital

A

Capital stock and additional paid-in capital (also called paid-in capital).

6
Q

Convertible preferred stock

A

Preferred stock that provides for the exchange of preferred stock into common stock at a specified ratio.

7
Q

Cost method

A

The Treasury Stock account is debited for the cost of the shares acquired and is credited upon reissuance for this same cost.

8
Q

Cumulative feature

A

A feature of preferred stock entitling the stockholder to receive current and unpaid prior-year dividends before common stockholders receive dividends.

9
Q

Date of declaration

A

The date the board of directors meets and approves the declaration of a dividend.

10
Q

Date of payment

A

The date the board of directors has approved to pay a dividend.

11
Q

Date of record

A

The date on which owners of the stock are entitled to a declared dividend.

12
Q

Discount on stock

A

The amount under par value paid in by stockholders in return for the shares issued to them.

13
Q

Dividend

A

When a corporation distributes assets (or issues additional stock) to the stockholders.

14
Q

Earned capital

A

Capital that develops if the business operates profitably; it consists of all undistributed income that remains invested in the enterprise.

15
Q

Equity capital

A

The contributed capital and earned capital of a corporation.

16
Q

Large stock dividend

A

A stock dividend of more than 20-25% of the number of shares previously outstanding.

17
Q

Liquidating dividend

A

A dividend not based on retained earnings; implying that stockholders are receiving a return of their investment, rather than profits.

18
Q

No-par stock

A

Shares issued with no per-share amount printed on the stock certificate.

19
Q

Paid-in capital

A

Capital stock and additional paid-in capital (also called

contributed capital).

20
Q

Par value stock

A

Capital stock that has been assigned a value per share in the corporate charter; it establishes the maximum responsibility of a stockholder in the event of insolvency or other involuntary dissolution.

21
Q

Participating dividends

A

A feature of preferred stock enabling the stockholder to share ratably with common stockholders in any dividends beyond the rate specified on the preferred stock.

22
Q

Preemptive right

A

A stockholder’s right to share proportionately in any new issues of stock of the same class.

23
Q

Preferred stock

A

Capital stock that has contractual preferences over common stock in certain areas.

24
Q

Property dividend

A

When a corporation distributes a dividend of an asset other than cash to the stockholders.

25
Q

Redeemable preferred stock

A

Preferred stock that has a mandatory redemption period or a redemption feature that the issuer cannot control.

26
Q

Retained earnings

A

Earnings retained for use in the business.

27
Q

Small (ordinary) stock dividend

A

Stock dividends of less than 20-25%.

28
Q

Stated value

A

The amount per share assigned by the board of directors to nopar stock that becomes legal capital per share.

29
Q

Statement of stockholders’ equity

A

The disclosure of changes in the separate accounts comprising stockholders’ equity.

30
Q

Stock dividend

A

The corporation issues additional stock to its stockholders rather than distributing any assets.

31
Q

Stock split

A

The corporation will issue additional stock to its stockholders; for example, the terms may indicate a split of 2-for-1 which would indicate that for every one share of stock a shareholder owns, they will receive an additional share of stock.

32
Q

Stockholders’ equity

A

The cumulative net contributions by stockholders (owners) plus recorded earnings that have been retained.

33
Q

Treasury stock

A

A corporation’s own stock that has been issued, fully paid for, and reacquired by the corporation but not retired.

34
Q

Return on Common Stock Equity

A

Net Income-Preferred Dividends divided by Average Common Stockholders’ Equity

Measures profitability from the common stockholders’ viewpoint. Shows how many dollars of net income the company earned for each dollar invested by the owners.

35
Q

Payout Ratio

A

Cash Dividends divided by Net Income

Ratio of cash dividends to net income.

36
Q

Book Value Per Share

A

Common Stockholders’ Equity divided by Outstanding Shares

The amount each share would receive if the company were liquidated on the basis of amounts reported on the balance sheet.