3302 Ch. 15

  1. Residual interest in the assets of an entity after deducting its liabilities.
  2. Represents the ownership interest.
  3. Equity does not represent a claim to..., but a claim against a...
    specific assets, portion of total assets
  4. An artificial person created by law and having a distinct existence separate and apart from the ones responsible for it.
  5. Can do anything a person can legally do.
    Separate legal entity
  6. The amount the stockholder has invested in the corporation to the extent of possible loss, but personal assets are protected.
    Limited liability
  7. Shares are bought and sold among stockholders w/o interrupting operations.
    Transferability of ownership
  8. The corporation continues in existence and is not dependent on the lives of its owners.
    Unlimited life
  9. 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
  10. Earnings of a corporation are subject to... whether the earnings are distributed or not.
    federal income tax
  11. There are... gov. regulations for corporations than for sole proprietorships or partnerships.
  12. The maximum # of shares a corporation is legally allowed to issue.
    Authorized shares
  13. The # of authorized shares that is sold to and held by shareholders.
    Issued shares
  14. The amount of stock that is currently held by shareholders.
    Outstanding shares
  15. The amount of outstanding shares that have been brought back, that will be retired or resold.
    Treasury stock
  16. Stock with a minimum value below which a company cannot issue it.
    Stated value stock
  17. With no par stock, prices are determined by...
    what investors are willing to pay.
  18. The amount of equity that is not allowed to leave the business, in order to protect creditors.
    Legal capital
  19. With the proportional method, the proceeds from the combined sale are allocated based on each...
    market value.
  20. Only use proportional method when the... are known.
    market values
  21. 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
  22. The overstatement of SE through intentional overvaluation of property or services by the board.
    Watered stock
  23. This results from undervaluing the property or services received in exchange for company stock.
    Secret reserves
  24. Summarizes the stockholder's share of assets resulting primarily from earnings not distributed as dividends.
    Retained Earnings
  25. Distributions of earnings to stockholders
  26. Who decides whether or not dividends should be declared?
    Board of directors
  27. Property dividends are recorded at the... of the...
    market value, asset given up.
  28. Dividends that are declared when the company is terminating or reducing operations.
    Liquidating dividends
  29. Dividends that are in the form of some asset other than cash.
    Property dividends
  30. Liquidating dividends reduce..., not retained earnings.
    contributed capital
  31. Dividends that occur when the company issues additional shares of its own stock.
    Stock dividends
  32. With stock dividends, contributed capital... and retained earnings...
    increases, decreases
  33. A small stock dividend is less than...-...% of common stock outstanding.
  34. Small stock dividends are viewed in the same way as... dividends and are recorded at...
    property, market value.
  35. A large stock dividend is greater than...-...% of common stock outstanding.
  36. Large stock dividends are viewed in the same way as a... and are recorded at...
    stock split, par
  37. A stock split is recorded by a...
    memo entry.
  38. With subscriptions, don't issue the stock until you are...
    paid in full.
  39. Stock subscriptions receivable is a... account.
  40. Treasury stock transactions do not result in... or...
    gains, losses
  41. Treasury stock transactions may... retained earnings, but not... it.
    reduce, increase
  42. 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
  43. RE available for dividends = ... - ...
    retained earnings, treasury stock cost
  44. Treasury stock may be reissued at above or below par value because... requirements were met at...
    legal capital, the original issue.
  45. Treasury stock... the # of shares outstanding, but does not affect the # of shares...
    reduces, issued
  46. The retirement of stock... the # of shares issued and outstanding.
  47. Neither treasury stock nor the retirement of stock affects the number of...
    shares authorized.
  48. The 2 methods to account for treasury stock transactions are the... and... method. SE is the same under both.
    cost, par.
  49. The 4 rights of common stockholders include the right to share proportionately in...
    • 1. Profits/losses
    • 2. Management
    • 3. Assets upon liquidation
    • 4. New issues of stock
  50. 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
  51. Preferred stock that allows holders to share ratably with the common stockholders in any distributions beyond the prescribed rate.
    Participating PS
  52. Preferred stock that allows stockholders to exchange their shares for common stock.
    Convertible PS
  53. Preferred stock that permits the corporation to call the outstanding preferred shares @ specified future dates.
    Callable PS
  54. Preferred stock that has a mandatory redemption period or feature that the issuer cannot control.
    Redeemable PS
  55. The FASB requires that redeemable preferred stock be treated as a...
Card Set
3302 Ch. 15