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10 Cards in this Set
- Front
- Back
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What is the difference between Shares Issued and Shares Outstanding?
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Shares issued is all stock that has been created for sale. Shares outstanding is all stock that is available in the secondary market.
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What is treasury stock?
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Treasury stock is stock held by the firm for later sale. Counts as part of shares issued, but not as part of shares outstanding.
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What is the formula for basic EPS?
(Earnings per common stock share) |
Basic EPS = (Income Available to Common)/(Weighted-Average Number of Common Shares Outstanding)
Note that Treasury stock does not count as part of shares outstanding, allowing a corp to boost EPS by buying a large amount of treasury stock. |
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List differences between Preferred and Common stock
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Common: Voting rights, common dividends, Preemptive right, junior claim to proceeds in event of liquidation.
Preferred: Primary claim on dividends & dividends in arrears, NO voting rights, senior claim in liquidation after creditors, Call feature, convertible feature, maturity date. |
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What is a stock dividend?
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Company issues additional shares of stock to shareholders on a basis of their currently held quantity. Requires a journal entry.
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What is the journal entry for the purchase of treasury stock under the cost method?
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Dr. Treasury stock
Cr. Cash |
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What is the JE for the sale of treasury stock (Assuming sale price > par)?
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Dr. Cash
Cr. Treasury stock for par*shares Cr. Paid-in Capital for difference |
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What is the JE for issuance of common stock at a value > par ?
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Dr. Cash
Cr. Common stock at par*shares Cr. Paid-in capital for difference |
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What is the JE for issuance of Preferred stock (assuming sale price > par)?
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Dr. Cash
Cr. Preferred stock at par*shares Cr. Paid-in capital-PS for difference |
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What type of account is treasury stock, and what other accounts may it affect?
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Treasury Stock is a contra equity item. It is not reported as an asset; rather, it is subtracted from stockholders' equity
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