Chapter 11: Stockholders' Equity

Advantages of corporate ownership:

Because a corporation is a ________, it can own assets, incur liabilities, sue/be sued, and be entered into contracts.

You must submit an application to the state government to create a corporation. When a corporation is approved, the issues the ________, which holds information about the company.

Voting rights, dividends, residual claims, and preemptive rights are all.....

________ let stockholders vote on important issues.

Stockholders have the right to receive ________ when declared by the board of directors.

Residual claims are also known as ________.

________ say that if a corporation goes bankrupt, stockholders share any remaining assets after creditors are paid.

________ means that existing stockholders have the first chance to purchase newly issued stock before it is issued to the public.

________ is issuing new stock to investors.

________ is borrowing money from lenders.

Equity does not have to be repaid and dividends are optional are both _________.

Interest on debt is tax deductible and debt does not change shareholder control are both examples of ________.

The four elements of stockholders' equity:

Contributed capital consists of ________.

APIC stands for ________. It is the amount collected over par.

________ is what capital the company receives from investors when they sell stock to them.

________ represents earned capital.

________ consists of shares that were issued, but the company bought back. It is a permanent, contra account to Common Stock/APIC with a debit balance and reduces stockholders' equity.

Recorded unrealized gains and losses that cause temporary changes in the value of assets and liabilities of the company.

The max number of shares that can be issued are called ________.

________ are permanently for the stockholder unless they sell them for another company or they are bought back.

________ are shares that have not been traded.

________ are owned by stockholders.

Outstanding shares are the only shares that ________.

________ is assigned to each share of stock that is authorized. Usually is a small number ($0.03). Some state require it.

Par value is not the same as _________, which is the value of what shares can sell for to the public.

________ does not have a determined price.

If they is no par in the equation, there is ________.

The first time a corporation's stock is available

When new stock is issued to the public, this is called ________.

The journal entry for issuing stock at par value.

A corporation not need a ________ when there is an interaction between two investors.

The ________ can include making a company believe the stock is worth getting, buying back shares to reissue them at a higher price, buying back shares to reissue them to employees, and lastly to reduce the number of outstanding shares.

When issued shares are bought back, it is recorded at ________.

Treasury stock has no _______.

_________ are only found on the balance sheet.

Journal entry for reacquiring stock:

Journal entry for reissued stock:

Stock transactions never generate ________.

________ is buying stock that pay a small amount of dividends or no dividends at all.

________ are from common stock that do pay dividends.

Before a dividend is declared, a company must have enough ________.

Dividends are.....

The ________ is the day when the Board of Directors decide to issue a cash dividend and the liability is established.

The journal entry for the declaration of a dividend.

The ________ is an administrative responsibility, so there is no journal entry.

The ________ reduces the liability and cash.

The journal entry for the date of payment:

The ________ is when the temporary accounts are closed to Retained Earnings.

The journal entry for year end/closing accounts:

Equation to calculate Outstanding shares:

________ is given to a special group of investors, but can be bought back.

________ means the preferred stock is retired, which results in the issuance being reversed.

Journal entry for redemption:

A ________ states that preferred dividends must be paid before paying dividends to stockholders.

A ________ states if a current dividend is not paid yet, the unpaid amount amount has to be paid before other common dividends.

________ regard cumulative preferred stock that has not been paid yet. They are not on the balance sheet.

________ are the collective earnings of a company.

The negative balance of Retained Earnings is called ________.

________ provides information on the profit earned from common stock that is outstanding.

Equation for calculating Earnings Per Share:

________ reports a company's return to stockholders.

Equation for calculating Return on Equity:

The ________ is a measure of the value that investors place on a company's common stock. A higher ratio predicts strong future performances.

Equation for calculating the Price/Earnings Ratio: