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44 Cards in this Set

  • Front
  • Back
Sources of stockholder's equity
1.Paid in Capital
2.Retained Earnings
3.Accum OCI
Paid in Capital
Amounts invested by shareholders
retained earnings
amounts earned by shareholders
Accum Other Comprehensive Income
non-owner changes in equity
common stockholder
a. Voting Rights.
b. Share in profits when dividends are declared.
c. Share in the distribution of assets if the company is liquidated.
preferred stockholder
a. Dividend and Liquidation preference over common stockholders.
b. No voting rights.
Features of preferred stock
1.can be converted into common stock
2. dividends
a. Stated dollar amount OR percent of par
b.may be cumulative or non-cumulative
c.unpaid dividends on cumulative preferred stock must be paid before any distributions to common shareholders
Redemable Preferred stock
1.has debt and equity features
2.mandatory redemption period
3.classified as debt by FASB 150
4.previously a mesadain item
Stock Issued for Cash
Investment is allocated between par value and paid in capital
common stock is always reported at ____ value. Diff is _____
par, paid in capital
Non-cash stock transactions
The transaction should be recorded at the fair value of either the shares or the noncash consideration, whichever is more clearly evident.
Share Issue Costs
Legal, printing, and accounting fees necessary to sell shares
Share Issue Costs reduce the
cash proceeds and paid-in capital
Purposes of reaquisition of shares
a.Decrease supply of shares in the market to support price of remaining shares.
b.Increase earnings per share.
c.To provide stock for stock compensation agreements.
DB CR for Issuance of Stock
cash 1,000
Common stock (par)100
Paid-In Cap (diff)900
Treasury Stock is a reduction in
stockholder's equity
Treasury stock uses the ___ method
DB CR Aquisition of treasury stock
Treasury stock xxx
Cash xxx
DB CR Sale of Treasury stock BELOW Cost
Cash XXX
PIC Treasury StockXXX
Treasury Stock (cost)XXX
DB CR Sale of Treasury stock ABOVE Cost
Cash XXX
Treasury Stock (cost) XXX
PIC Treasury Stock XXX
Special rule for PIC Treasury stock when sold BELOW cost
only debit this account to the extent of its credit balance; use retained earnings for difference
DB CR if sell BELOW cost with extra credit
Cash 10
Retained earnings (bal) 1
PIC from treasury stock 2
Treasury stock (cost) 10
Retained Earnings represents
accumulated, undistributed Income or Loss
Dividends __________ retained earnings
cumulated deficit
A debit balance in retained earnings is considered a deficit
Registered owners at the date of ________, are entitled to dividends
DB CR Declaration date of cash dividends
Retained Earnings XXX
Cash Dividends Pybl XXX
No dividends are declared or paid on ____________
treasury stock
Property Dividend features
1.the Fair market vale of assets to be distributed/recorded is used
2.adjust the asset to fair value, which results in a gain or loss
DB CR to record gain on property dividends on declaration date
Investment in pref stock X
Gain on appr. of Inv X
DB CR to record property dividends on distribution date
Prop dividends pybl X
Inv in pref stock X
What happens with a stock dividend?
1.additional shares of stock are distributed
2.each stockholder's % stays the SAME
Accounting for stock dividends depends on
if its small or large
Small stock dividend is recorded at
fair value
large stock dividend is recorded at
par value
DB CR for small stock dividend
Retained Earning (FAIR VALUE)
Common stock (par)
PIC excess of par
DB CR for large stock dividend
Retained earnings (par)
Common stock (par)
why have a stock split?
if investors are concerned the stock is overvalued
stock split typically has no journal entry because
Total stock remains the same, companies adjust par value
What do we need to see on the balance sheet?
1.classes of capital stock (including: par value, # of shares authorized and issues)
2.Paid-In capital Accounts
3.Retained earnings
4.Accumulated OCI
What do we need to see on the stmt of stockholder's equity?
Changes in each equity line item (columnar format) – including capital stock, paid-in capital, retained earnings, accumulated other comprehensive income)
1.Beginning Balance
4.Ending Balance
The balance sheet shows the ___________ activity of the year
point in time, at end of year
What are required disclosures?
1.Dividend and Liquidation Preferences on P/S
2.Call and Conversion Information on P/S
3.Preferred Dividends in Arrears
4.Restrictions on Retained Earnings