Accounting Chapter 9

Front 1

authorized stock

Back 1

maximum number of shares a corporation can issue under its charter

Front 2

board of directors

Back 2

group elected by the stockholders to set policy for a corporation and to appoint its officers

Front 3

book value (of a stock)

Back 3

amount of ownders' equity on the compnay's books for each share of its stock

Front 4

bylaws

Back 4

constitution for governing a corporation

Front 5

chairperson

Back 5

elected by a corporation's board of directors, usually the most powerful person in the corporation

Front 6

common stock

Back 6

the most basic form of capital stock. the common stockholders own a corporation

Front 7

contributed capital

Back 7

the amount of stockholders' equity that stockholders have contributed to the corporation. also called "paid-in capital"

Front 8

cumulative preferred stock

Back 8

preferred stock whose ownders must receive all dividends in arrears before the corporation can pay dividends to the common stockholders

Front 9

deficit

Back 9

debit balance in the retained earnings account

Front 10

dividend

Back 10

distribution (usually cash) by a dorporation to its stockholders

Front 11

double taxation

Back 11

corporations pay income taxes on corporate income. then, the stockholders pay personal income tax on the cash dividends that they receive from corporations

Front 12

issued stock

Back 12

number of shares a corporation has issued to its stockholders

Front 13

legal capital

Back 13

minimum amount of stockholders'equity that a corporation must maintain for the protection of creditors. for corporations with par-value stock, legal capital is the par value of the stock issued

Front 14

limited liability

Back 14

no personal obligation of a stockholder for corporation debts. a stockholder can lose no more on an investment in a corporation's stock than the cost of the investment

Front 15

liquidation value

Back 15

the amount of corporation must pay a preferred stockholder in the event the company liquidates and goes out of business

Front 16

market value (of a stock)

Back 16

price for which a person could buy or sell a share of stock

Front 17

outstanding stock

Back 17

stock in the hands of stockholders

Front 18

paid-in capital

Back 18

the amount of stockholders' equity that stockholders have contributed to the corporation (also called "contributed capital")

Front 19

par value

Back 19

arbitrary amount assigned by a company to a share of its stock

Front 20

preferred stock

Back 20

stock that gives its owners certain advantages, such as the priority to receive dividends before the common stockholders and the priority to receive assets before the common stockholders if the corporation liquidates

Front 21

president

Back 21

chief operating officer in charge of managing the day-to-day operations of a corporation

Front 22

rate of return on common stockholders' equity

Back 22

net income minus preferred dividends, divided by average common stockholders' equity. a measure of profitability. also called "return on equity"

Front 23

rate of return on total assets

Back 23

net income plus interest expense divided by avg total assets. this ratio measures a company's success in using its assets to earn income for the persons who finance the business. also called "reeturn on assets"

Front 24

redeemable preferred stock

Back 24

a corporation reserves the right to buy an issue of stock back from its shareholders, with the intent to retire the stock

Front 25

redemption value

Back 25

the price a corporation agrees to eventually pay for its redeemable preferred stock, set when the stock is issued

Front 26

retained earnings

Back 26

the amount of stockholders' equity that the corporation has earned through profitable operation of the business and has not given back to stockholders

Front 27

reutrn on assets (ROA)

Back 27

another name for "rate of return on total assets"

Front 28

return on equity (ROE)

Back 28

another name for "rate of return on common stockholders' equity"

Front 29

shareholders

Back 29

persons or other entities that own stock in a corporation. also called "Stockholders"

Front 30

stated value

Back 30

an arbitrary amount assigned to no-par sotck; similar to par value

Front 31

stock

Back 31

shares into which the owners' equity of a corporation is divided

Front 32

stock dividend

Back 32

a proportional distribution by a corporation to its own stock to its stockholders

Front 33

stockholder

Back 33

a person who owns stock in a corporation. also called a "shareholders"

Front 34

stockholders' equity

Back 34

the stockholders' ownership interest in the assets of a corporation

Front 35

stock split

Back 35

an increase in the number of authorized, issued, and outstanding shares of stock coupled w/ a proportionate reduction in the stock's pa value

Front 36

treasury stock

Back 36

a corporations own stock that it has issued and later reaquired.