Accounting Ch. 11

Front 1

Available-for-sale securities

Back 1

Securities that are held with the intent of selling them sometime in the future

Front 2

Consolidated financial statements

Back 2

Financial statements that present the assets and liabilities controlled by the parent company and the total revenues and expenses of the subsidiary companies.

Front 3

Controlling interest

Back 3

Ownership of more than 50% of the common stock of another entity.

Front 4

Cost method

Back 4

An accounting method in which the investment in common stock is recorded at cost and revenue is recognized only when cash dividends are received.

Front 5

Debt investments

Back 5

Investments in government and corporation bonds.

Front 6

Equity method

Back 6

An accounting method in which the investment in common stock is initially recorded at cost and the investment account is then adjusted annually to show the investor's equity in the investee.

Front 7

Fair value

Back 7

Amount for which a security could be sold in a normal market.

Front 8

Held-to-maturity securities

Back 8

Debt securities that the investor has the intent and ability to hold to maturity.

Front 9

Long-term investments

Back 9

Investments that are not readily marketable or that management does not intend to convert into cash within the next year or operating cycle, whichever is longer.

Front 10

Mark-to-market

Back 10

A method of accounting for certain investments that require that they are adjusted to their fair value at the end of each period.

Front 11

Parent company

Back 11

A company that owns more than 50% of the common stock of another entity.

Front 12

Short-term investments (marketable securities)

Back 12

Investments that are readily marketable and intended to be converted into cash within the next year or operating cycle, whichever is longer.

Front 13

Stock investments

Back 13

Investments in the capital stock of corporations.

Front 14

Subsidiary (affiliated) company

Back 14

A company in which more than 50% of its stock is owned by another company.

Front 15

Trading securities

Back 15

Securities bought and held primarily for sale in the near term to generate income on short-term price differences.

Front 16

Authorized stock

Back 16

The amount of stock that a corporation is authorized to sell as indicated in its charter.

Front 17

Cash dividend

Back 17

A pro rata (proportional to ownership) distribution of cash to stockholders.

Front 18

Charter

Back 18

A document that describes a corporation's name and purpose, types of stock and number of shares authorized, names of individuals involved in the formation, and number of shares each individual has agreed to purchase.

Front 19

Corporation

Back 19

A company organized as a separate legal entity, with most of the rights and privileges of a person.

Front 20

Cumulative dividend

Back 20

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

Front 21

Declaration date

Back 21

The date the board of directors formally authorizes the dividend and announces it to stockholders.

Front 22

Deficit

Back 22

A debit balance in Retained Earnings.

Front 23

Dividend

Back 23

A distribution by a corporation to its stockholders on a pro rata (proportional to ownership) basis.

Front 24

Dividends in arrears

Back 24

Preferred dividends that were supposed to be declared but were not declared during a given period.

Front 25

Legal capital

Back 25

The amount of capital that must be retained in the business for the protection of corporate creditors.

Front 26

No-par value stock

Back 26

A capital stock that has not been assigned a value in the corporate charter.

Front 27

Outstanding stock

Back 27

Capital stock that has been issued and is being held by stockholders

Front 28

Paid-in capital

Back 28

The amount stockholders paid into the corporation in exchange for shares of ownership.

Front 29

Par value stock

Back 29

A capital stock that has been assigned a value per share in the corporate charter.

Front 30

Payment date

Back 30

The date cash dividend payments are made to stockholders.

Front 31

Payout ratio

Back 31

A measure of the percentage of earnings a company distributes in the form of cash dividends to common stockholders

Front 32

Preferred stock

Back 32

A capital stock that has contractual preferences over common stock in certain areas.

Front 33

Privately held corporation

Back 33

A corporation that has only a few stockholders and whose stock is not available for sale to the general public.

Front 34

Publicly held corporation

Back 34

A corporation that may have thousands of stockholders and whose stock is traded on a national securities market.

Front 35

Record date

Back 35

The date when the company determines ownership of outstanding shares for dividend purposes.

Front 36

Retained earnings

Back 36

Net income that a company retains in the business.

Front 37

Retained earnings restrictions

Back 37

Circumstances that make a portion of retained earnings currently unavailable for dividends.

Front 38

Return on common stockholders' equity (ROE)

Back 38

A measure of profitability from the stockholders' point of view; computed by dividing net income minus preferred dividends by average common stockholders' equity.

Front 39

Stated value

Back 39

The amount per share assigned by the board of directors to no-par stock.

Front 40

Stock dividend

Back 40

A pro rata (proportional to ownership) distribution of the corporation's own stock to stockholders.

Front 41

Stock split

Back 41

The issuance of additional shares of stock to stockholders accompanied by a reduction in the par or stated value per share.

Front 42

Treasury stock

Back 42

A corporation's own stock that has been reacquired by the corporation and is being held for future use.