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20 Cards in this Set
- Front
- Back
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What is a stockholder?
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It is a person who owns stock in a corporation
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What is continuous life?
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The life of a corporation does not end when a stockholder transfers their stock
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How does limited liability affect stockholders?
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It frees the stockholders from all liabilities that the corporation may face, they only lose their investment
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Who manages a corporation?
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A corporation is owned by the stockholders, however, they elect a board of directors to manage the day to day activities
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What is double taxation?
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It is when the corporation pays income tax and then the stockholders pay personal taxes on the dividends they receive
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What are the stockholder's rights?
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They have the right to vote, to receive dividends, liquidation in case of going out of business, and preemption
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What is a stock?
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They are shares into which the owners' equity of a corporation is divided
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What is outstanding stock?
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It is the stock that is in the hands of stockholders
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What is common stock?
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It is the most basic form of capital stock
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What is preferred stock?
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It is a certain type of stock that gives owners certain advantages such as that of receiving dividends before common stockholders
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What are par value stocks?
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Par value is an arbitrary amount assigned by a company to a share of its stock
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What is legal capital?
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It is the minimum amount of stockholder's equity that a corporation must maintain for the protection of creditors
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What is stated value?
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It is an amount assigned to no-par stock
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How to journalize the issuance of stock at par?
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Debit cash for the amount received and credit common stock
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How to journalize the issuance of stock above par?
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Debit cash by total amount received and credit common stock at par price, and also credit paid-in capital in excess of par with the remaining amount
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How to journalize no-par stock?
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Debit cash by amount received and credit common stock
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What is treasury stock?
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It is stock a corporation has issued and later reacquired
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How to journalize treasury stock?
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Debit treasury stock for the amount paid for the stock and credit cash for the same amount
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How to journalize the sell of the treasury stock?
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Debit cash for amount received, credit treasury stock to cancel the account and any excess money credit it to paid-in capital from treasury stock transactions
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How to journalize the retirement of stock?
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Debit the stock account and any additional paid-in capital on the stock and credit cash
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