Term
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Definition
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Term
| Define shareholder's equity. |
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Definition
| The residual value, what's left over after creditor's claims have been subtracted from assets. |
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Term
| How GAAP reports shareholder's equity. |
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Definition
| Flexible with choices in accounting affecting shareholder's equity. |
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Term
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Definition
| Consists of amounts invested by shareholders when they purchase shares of stock from the corporation. Amounts are also sometimes invested by others. |
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Term
| Define retained earnings. |
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Definition
| Represents a corporation's accumulated undistributed net income or net loss. |
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Term
| Name two primary components of shareholder's equity. |
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Definition
| Paid-In Capital and Retained Earnings |
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Term
| Define comprehensive income. |
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Definition
| The total non-owner change in equity for a reporting period. |
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Term
| Name the four types of gains or losses that are included in comprehensive income. |
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Definition
1. Net holding gains or losses on investments
2. Net unrecognized loss on pensions.
3. Deferred gains or losses from derivatives.
4. Gains or losses from foreign currency translations. |
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Term
| Name two ways reacquired shares can be accounted for. |
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Definition
1. Formally retire shares.
2. Account for shares as treasury stock |
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Term
| Name two ways to account for a stock split. |
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Definition
1. No journal entry
2. In the form of a stock dividend (Could either capitalize retained earnings or paid-in capital. Credit common stock at par value.) |
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Term
| How are shares sold for consideration other than cash recorded? |
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Definition
| Recorded at fair market falue for the non-cash consideration. |
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Term
Prepare a journal entry for reacquired stock as a) retired shares and b) treasury stock.
Common stock,122 million shares @ $1 par
Paid-In Captial-excess of par common 854 million
Corporation purchased 6 million shares at $10 a share |
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Definition
a) Common Stock 6
Paid-In Capital 42
Retained Earnings 12
Cash 60
b) Treasury Stock 60
Cash 60 |
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Term
| Rights of preferred shareholders. |
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Definition
1. Have preference over common shareholders to any dividends declared.
2. Preference to any assets distrubuted by the company. |
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Term
| Define dividends in arrears. |
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Definition
| Unpaid dividends of prior years and must be made up in later years before any common dividends are paid. |
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Term
Participating vs. Nonparticipating
What's the difference? |
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Definition
Participating allows preferred shareholders to receive additional dividends beyond the stated amount.
Nonparticipating doesn't allow shareholders to receive additional dividends. |
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Term
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Definition
| Par value is used as a basis or measurement for the issuance of shares by a corporation. This is the value at which stock gets put on the books. |
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Term
Prepare the following journal entry.
Dow sells 100,000 common shares $1 par for $10 per share. |
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Definition
Cash 1,000,000
Common Stock 100,000
Paid-In Capital 900,000 |
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Term
| What is the effect of share issue costs? |
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Definition
| They reduce the net cash proceeds from selling the shares and paid-in capital-excess of par. |
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Term
| What is the balance sheet effect of formally retiring shares? |
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Definition
| Formally retiring shares restores the balances in both the common stock account and paid-in capital-excess of par to what those balances would have been if the shares had never been issued at all. |
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Term
| What is a debit in retained earnings refered to? |
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Definition
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Term
What journal enrty is needed for cash dividends on each of the following events:
1. Date of declaration
2. Date of record
3. Payment date |
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Definition
1. Retained earnings
Cash dividends payable
2. No Entry
3. Cash dividends payable
Cash |
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Term
| When a noncash asset is distributed it is referred to as a ____________. |
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Definition
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Term
| What must you do before recording a property dividend? |
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Definition
| The asset must first be written up at fair market value. |
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