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35 Cards in this Set

  • Front
  • Back

Authorized stock

The maximum number of shares of stock that the corporate charter allows the corporation to issue.

Issued stock

Stock that has been issued but may or may not be held by stockholders.

Stock certificate

Paper evidence of ownership in a corporation.

Corporation

A business organized under state law that is a separate legal entity.

Capital stock

Represents the individuals ownership of the corporation's capital.

Dividend

A distribution of a corporation's earnings to stockholders.

Preemptive right

Stockholders right to maintain his or her proportionate ownership in the corporation.

Common stock

Represents the basic ownership of a corporation.

Preferred stock

Stock that gives its owner's certain advantages over common stockholders, such as the right to receive dividends before the common stockholders and the right to receive assets before the common stockholders if the corporation liquidates.

Par value

An amount assigned by a company to a share of its stock.

No par stock

Stock that has no amount assigned to it.

Stated value stock

No par stock that has been assigned an amount similar to par value.

Stockholders equity

A corporation's Equity that includes paid in capital and retained earnings.

Paid in capital

Represents amount received from the stockholders of a corporation in exchange for stock.

Retained earnings

Equity earn by profitable operations of a corporation that is not distributed to stockholders.

Underwriter

A firm that handles the issuance of a company's stock to the public usually assuming some of the risk by agreeing to buy the stock if the firm cannot sell all of the stock to its clients.

Issue price

The price the stock initially sells for the first time it is sold.

Premium

The amount above par at which a stock is issued.

Paid in capital in excess of par

Represents amounts received from stockholders in excess of the par value.

Treasury stock

A corporation's own stock that it has previously issued and later reacquired.

Legal capital

The portion of stockholders Equity that cannot be used for dividends.

Dividend in arrears

A preferred stock dividend is in arrears if the dividend has not been paid for the year and the preferred stock is cumulative.

Cumulative preferred stock

Preferred stock whose owners must receive all dividends in arrears plus the current year dividend before the corporation pays dividends to the common stockholders.

Non-cummulative preferred stock

Preferred stock whose owners do not receive past dividends.

Stock dividend

A distribution by a corporation of its own stock to its stockholders.

Small stock dividend

Stock dividend of less than 20 to 25% of the issued and outstanding stock.

Large stock dividend

A stock dividend greater than 20 to 25% of the issued and outstanding stock.

Stock split

An increase in the number of issued and outstanding shares of stock coupled with a proportionate reduction in the par value of the stock.

Memorandum entry

An entry in the journal that shows a significant event, but has no debit or credit amounts.

Deficit

Debit balance in the retained earnings account.

Appropriation of retained earnings

Restriction of a portion of retained earnings that is recorded by the journal entry

Prior period adjustment

A correction to retained earnings for an error of an earlier period.

Earnings per share

Amount of a company's net income or loss for each share of its outstanding common stock. (Net income - preferred dividends) / weighted average number of common shares outstanding.

Price / earnings ratio

The ratio of the market price of a share of common stock to the company's earnings per share. Measures the value of the stock market places on $1 of a company's earnings. Market price per share of common stock / earnings per share

Rate of return on common stockholders equity

Shows the relationship between net income available to Common stockholders and their average common Equity invested in the company. (Net Income - preferred dividends) / average common stockholders equity