Accounting Chapter 13

Front 1

Authorized shares

Back 1

The total number of shares the state has approved for a corporation to sell.

Front 2

Budgeted (pro forma) statement of owners capital

Back 2

A statement that indicates the anticipated changes in each partner's capital.

Front 3

Callable preferred stock

Back 3

Preferred stock that gives the issuing corporation the right to repurchase the preferred stock at a stipulated price.

Front 4

Cash dividend

Back 4

A cash distribution in the form of a check drawn on the coporation's bank account that is sent to each shareholder as of a certain date.

Front 5

Common stock

Back 5

The basic ownership unit of a corporation. Right to vote, right to declared dividends, right to residuall assets upon liquidation of the corporation, right to dispose of shares by sale or gift, and preemptive right.

Front 6

Convertible preferred stock

Back 6

Preferred stock that gives the shareholder the right to convert (exchange) the preferred shares for other forms of capital, as stated in the corporate charter, at the option of the preferred shareholder.

Front 7

Cumulative preferred stock

Back 7

Preferred stock that accumulates unpaid dividends over time.

Front 8

Date of declaration

Back 8

The date on which the board of directors announces its decision to pay a dividend. Sets the amount of the dividend and the date to distibute it. For cash and property dividends, corp. obligated to pay dividend on date of payment (liability).

Front 9

Ex-dividend date

Back 9

Last day to buy stock in order to receive dividend. Provides the lead time necessary to record the names of new shareholders in corporate records. Occurs 2 to 3 days prior to the date of record.

Front 10

Date of record

Back 10

Shareholders' names listed at this time on the secretary of the corporation's record will receive dividends declared on date of declaration.

Front 11

Date of payment

Back 11

Corporation pays dividends to shareholders of record.

Front 12

Debt financing

Back 12

When a company obtains funds (cash) in exchange for a liability to repay the borrowed funds.

Front 13

Dividend reinvestment program (DRIP)

Back 13

A program that allows current shareholders to use their cash dividends to buy more shares of the company's stock

Front 14

Dividends in arrears

Back 14

The amount of cumulative preferred stock dividends not paid in full when stipulated.

Front 15

Equity financing

Back 15

A means for a company to obtain funds in exchange for an ownership interest in the company.

Front 16

Financial leverage

Back 16

A financing strategy designed to increase the rate of return on the owners' investment than the cost of using the funds. Use "Debt-to Equity Ratio" (total liability/total owners' equity).

Front 17

Financial risk

Back 17

The chance that a company will fail because it defaults on its debt.

Front 18

Issued shares

Back 18

The number of authorized shares a corporation has sold to shareholders.

Front 19

Legal capital

Back 19

The portion of shareholders' equity required by state law to be retained for the protection of the coporation's creditors.

Front 20

Market value

Back 20

Price agreed to by a willing unrelated buyer and seller.

Front 21

No-par, stated value stock

Back 21

Stock with a minimum issue price or stated value established by the corporation's board of directors but no par value specified in the charter.

Front 22

No-par stock

Back 22

Stock that does not have a minimum price assigned to each share of stock.

Front 23

Outstanding shares

Back 23

The number of shares issued and held outside the corporation.

Front 24

Par value

Back 24

An arrbitrary value assigned to shares of capital stock that is approved by the state.

Front 25

Participating preferred stock

Back 25

Preferred stock that allows preferred s hareholders the right to receive an amount in excess of the stated dividend rate or amount.

Front 26

Preemptive right

Back 26

A right of common shareholders that allows them to maintain their percentage interest in the coporation when it issues new shares of common stock.

Front 27

Preferred stock

Back 27

An ownership interest in a coporatioin with special privileges or preferences as to liquidation and dividends. Upon liquidation, they are paid before common stockholders and entitled to receive dividends before common stockholders. In exchange, give up right to vote, dividends limited to set amount.

Front 28

Property dividend

Back 28

The distibution of specific noncash assets to the shareholders of a corporation.

Front 29

Redeemable preferred stock

Back 29

Preferred stock that allows a shareholder to turn in (redeem) the preferred stock for cash at the shareholder's option.

Front 30

Retired shares

Back 30

Repurchased issued shares that the corporation will never reissue.

Front 31

Return on common equity ratio.

Back 31

A ratio that measure the proportion of income available to provide a return for common shareholders.

Front 32

Return on owner's equity ratio (ROE)

Back 32

A ratio that measures the performance of the company in terms of the owners' investment. (After-tax Net Income/Owners' equity).

Front 33

Reverse stock split

Back 33

The corporation's recall of its old shares of stock and issuance of a smaller number of new shares in their place.

Front 34

Sttock dividend

Back 34

The distribution of additional shares of the corporation's stock to existing shareholders.

Front 35

Stock split

Back 35

The corporation's recall of its old shares of stock and issuance of a larger number of new shares in their place.

Front 36

Times interest earned ratio

Back 36

A measure of the company's ability to serrvice its debt. (Earnings before interest & taxes/Interest expense).

Front 37

Treasury stock

Back 37

The shares of a corporation's issued stock that the corporation has repurchased and intends to reissue at a later date.