Acct 2100 Test 3 (Ch 8-10)

Front 1

Owned by a single individual who is responsible for making business and profit distribution decisions

Back 1

Sole Proprietorship

Front 2

A business that allows persons to share their talents, capital, and the risks and rewards of business ownership

Back 2

Partnership agreement

Front 3

Ownership of corp. can be transferred from one individual to another through exchanging

Back 3

Stock certificates: evidence of ownership in a company

Front 4

As long as the exchange (often called trading) are limited to transactions b/w individuals, a company is defined as a

Back 4

closely held corporation

Front 5

The stock market crash led Congress to pass what 3 acts (one was later on in the 21st Century)

Back 5

Securities Act of 1933:

Securities Exchange Act of 1934: Created the Securities and Exchange Commission (SEC) to enforce securities laws.

Sarbanes-Oxley Act of 2002: Creates a five-member Public Company Accounting Oversight Board with the authority to sett and enforce auditing, attestation, quality control, and ethics standards for auditors of public companies.

Front 6

Management structure that uses a board of directors that elect executive officers.

Back 6

Entrenched management

Front 7

A business organization that offer many of the benefits of corp ownership yet are in general taxed as partnerships.

Back 7

Limited liability Companies

Front 8

Term used to explain the continued life of a corp through exchanging of shareholders equity

Back 8

Continuity

Front 9

Term used to describe the capability of an investor to buy and sell stock to acquire or give up ownership interest in a corp.

Back 9

Transfer-ability

Front 10

Represents the maximum liability to the investors. ______ multiplied by the number of shares of stock issued represents the minimum amount of assets that must be retained in the company as protection for creditors. This amount is known as ________

Back 10

Par value; legal capital

Front 11

an arbitrary amount assigned by the board of directors to the stock

Back 11

stated value

Front 12

The price an investor must pay to purchase stock is

Back 12

market value

Front 13

Book value per share

Back 13

calculated by dividing total stockholders equity (assets - liabilities) by the number of share of stock owned by investors.

Represents investor's estimates of a company's current value.

Front 14

The maximum number of available stock is known as

Back 14

authorized stock

Front 15

Authorized stock that has been sold to the public is called

Back 15

issued stock

Front 16

when a corp buys back some of its issued stock from the public, the repurchased stick is called

Back 16

treasury stock

Front 17

______ (Total issued stock minus treasury stock) is stock owned by investors outside the corp.

Back 17

Outstanding stock

Front 18

_______ stockholders bear the highest risk of losing their investment if a company is forced to liquidate. on the other hand, they reap the greatest rewards when a corp. prospers

Back 18

Common Stock

Front 19

Holders of ___________ receive certain privileges relative to holders of common stock. Give up some privileges but gain certain guarantees:

Ex: they get paid before any other stock holders

Back 19

Preferred stock

Front 20

if the corp. is unable to pay the preferred divided in any year, the divided is not lost buy begins to accumulate.

Back 20

cumulative dividends

Front 21

Cumulative dividends that have not been paid are called

Back 21

dividends in arrears

Front 22

Any amount received above the par or stated value is recorded in an account called

Back 22

Paid-in Capital in Excess of par Value

Front 23

The date a company chooses to recognize the obligation to pay dividends

Back 23

declaration date

Front 24

Cash dividends are paid to investor who owned the preferred stock on ___________. Merely a cut off date

Back 24

date of record

Front 25

Any stock sold after the date or record but before the payment date is know as _______. The buyer will not receive the upcoming dividends.

Back 25

ex-dividend

Front 26

The date the corp actually pays the dividends

Back 26

payment date

Front 27

Instead of issuing cash dividends, corp will often choose to issue _________, wherein they distribute additional shares of stock the stockholders

Back 27

stock dividends

Front 28

A ______ replaces existing shares with a greater number of new shares.

Back 28

stock split

Front 29

Working Capital

Back 29

Current Assets -- Current Liabilities

This helps determine how fast you can pay off debt

Front 30

Current Ratio

Back 30

Current Assets / Current Liabilities

Front 31

Quick (acid test ratio)

Back 31

(Current Assets - inventory - prepaid items) / Current liabilities

Front 32

Accounts receivable turnover

Back 32

Net Credit sales / average receivables

Front 33

Average # of days to collect receivables

Back 33

365 / Accounts receivable turnover

Front 34

Inventory turnover

Back 34

COGS / average inventory

Front 35

Average # of days to sell inventory

Back 35

365 / inventory turnover

Front 36

Average days in AR and average days to sell inventory together is called

Back 36

Operating cycle

Front 37

debt to equity

Back 37

total liabilities / total stockholder's equity

Front 38

return on investments (also return on assets)

Back 38

Net income / average total assets

Front 39

earnings per share

Back 39

Net earnings available for CS / Average outstanding CS

Front 40

Price earning ratio

Back 40

Market price per share / earnings per share