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Residual interest in the assets of an entity after deducting its liabilities.
Equity
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Represents the ownership interest.
Equity
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Equity does not represent a claim to..., but a claim against a...
specific assets, portion of total assets
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An artificial person created by law and having a distinct existence separate and apart from the ones responsible for it.
Corporation
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Can do anything a person can legally do.
Separate legal entity
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The amount the stockholder has invested in the corporation to the extent of possible loss, but personal assets are protected.
Limited liability
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Shares are bought and sold among stockholders w/o interrupting operations.
Transferability of ownership
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The corporation continues in existence and is not dependent on the lives of its owners.
Unlimited life
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Can raise large amounts of capital because of the attractiveness to investors and the liquidity available due to the ease of transfer of ownership.
Capital raising capability
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Earnings of a corporation are subject to... whether the earnings are distributed or not.
federal income tax
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There are... gov. regulations for corporations than for sole proprietorships or partnerships.
more
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The maximum # of shares a corporation is legally allowed to issue.
Authorized shares
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The # of authorized shares that is sold to and held by shareholders.
Issued shares
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The amount of stock that is currently held by shareholders.
Outstanding shares
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The amount of outstanding shares that have been brought back, that will be retired or resold.
Treasury stock
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Stock with a minimum value below which a company cannot issue it.
Stated value stock
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With no par stock, prices are determined by...
what investors are willing to pay.
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The amount of equity that is not allowed to leave the business, in order to protect creditors.
Legal capital
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With the proportional method, the proceeds from the combined sale are allocated based on each...
market value.
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Only use proportional method when the... are known.
market values
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With the incremental method, part of the proceeds are allocated to the ones with known..., and the rest is allocated to the ones with unknown...
market values, market values
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The overstatement of SE through intentional overvaluation of property or services by the board.
Watered stock
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This results from undervaluing the property or services received in exchange for company stock.
Secret reserves
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Summarizes the stockholder's share of assets resulting primarily from earnings not distributed as dividends.
Retained Earnings
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Distributions of earnings to stockholders
Dividends
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Who decides whether or not dividends should be declared?
Board of directors
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Property dividends are recorded at the... of the...
market value, asset given up.
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Dividends that are declared when the company is terminating or reducing operations.
Liquidating dividends
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Dividends that are in the form of some asset other than cash.
Property dividends
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Liquidating dividends reduce..., not retained earnings.
contributed capital
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Dividends that occur when the company issues additional shares of its own stock.
Stock dividends
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With stock dividends, contributed capital... and retained earnings...
increases, decreases
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A small stock dividend is less than...-...% of common stock outstanding.
20,25
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Small stock dividends are viewed in the same way as... dividends and are recorded at...
property, market value.
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A large stock dividend is greater than...-...% of common stock outstanding.
20,25
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Large stock dividends are viewed in the same way as a... and are recorded at...
stock split, par
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A stock split is recorded by a...
memo entry.
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With subscriptions, don't issue the stock until you are...
paid in full.
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Stock subscriptions receivable is a... account.
contra-equity
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Treasury stock transactions do not result in... or...
gains, losses
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Treasury stock transactions may... retained earnings, but not... it.
reduce, increase
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The amount that may be paid to acquire treasury stock is limited to the balance in..., so that legal capital is not impaired.
retained earnings
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RE available for dividends = ... - ...
retained earnings, treasury stock cost
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Treasury stock may be reissued at above or below par value because... requirements were met at...
legal capital, the original issue.
-
Treasury stock... the # of shares outstanding, but does not affect the # of shares...
reduces, issued
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The retirement of stock... the # of shares issued and outstanding.
reduces
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Neither treasury stock nor the retirement of stock affects the number of...
shares authorized.
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The 2 methods to account for treasury stock transactions are the... and... method. SE is the same under both.
cost, par.
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The 4 rights of common stockholders include the right to share proportionately in...
1.
2.
3.
4.
- 1. Profits/losses
- 2. Management
- 3. Assets upon liquidation
- 4. New issues of stock
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Preferred stock that requires a corporation, that fails to pay a dividend in any year, to make it up before paying dividends to common stockholders.
Cumulative PS
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Preferred stock that allows holders to share ratably with the common stockholders in any distributions beyond the prescribed rate.
Participating PS
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Preferred stock that allows stockholders to exchange their shares for common stock.
Convertible PS
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Preferred stock that permits the corporation to call the outstanding preferred shares @ specified future dates.
Callable PS
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Preferred stock that has a mandatory redemption period or feature that the issuer cannot control.
Redeemable PS
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The FASB requires that redeemable preferred stock be treated as a...
liability
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