Term
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Definition
Represents Basic ownership Interest
1. Bears ultimate risks of loss and benefits of success
2. Usually has voting rights
3. Not guaranteed dividends nor assets upon dissolution
If no other types of stock then it is designated by issue COMMON STOCK |
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Term
| Special Characteristics of the corporate form that affect accounting? |
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Definition
1. Influence of state corporate law
2. Use of capital stock or share system
3. Development of a variety of ownership interests |
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Term
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Definition
| Is created by contract, stockholders' sacrifice certain rights in return for other rights/privileges, usually dividend preference. The dividends are an assurance, like a bond |
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Term
Is each share personal property?
And may it be sold for whatever the sellers wants to sell it for? |
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Definition
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Term
| What does shares issued =? |
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Definition
| Shares outstanding + treasury Shares |
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Term
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Definition
| The amount of shares that your allowed to sell |
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Term
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Definition
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Term
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Definition
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Term
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Definition
| The earned capital of the company |
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Term
| What does earned capital represent? |
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Definition
| The capital that developed from profitable operations. All undistributed income that remains invested in the company |
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Term
| Why do most companies have low par values? |
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Definition
| Avoid contingent liability |
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Term
| Why is it advantageous to have no-par-value stock? |
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Definition
Because then its not difficult to find FMV because there are no other numbers as well as no contingent liability at all
But some states levy a high tax on these stocks
There is no effect on Additional paid in capital or discount/premium |
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Term
| When you can recognize the FMV of all stocks use? |
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Definition
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Term
| What is the general rule for stock issued in noncash transactions |
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Definition
Should record stock issued for services or property other than cash at either:
Fair value of the stock issued or
Fair value of the noncash consideration received
Whichever is more clearly determinable. |
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Term
Where should direct costs incurred in the creation of the stock go?
Bottom of pg. 748 |
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Definition
| They should be a debit to additional Paid-in Capital |
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Term
| Why do companies repurchase (reaquisition of shares) their stocks? |
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Definition
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Term
| What is a leveraged buyout? |
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Definition
| When the company finances money so that it can repurchase all outstanding stocks to become private. |
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Term
| What are stocks that are reaquired but not retired? |
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Definition
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Term
| Does buying back stocks reduce or increase net assets? |
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Definition
| Reduce because there is less cash on hand now. |
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Term
| What does the sale of treasury stock do to assets, stockholder's equity |
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Definition
| It increases both of them |
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Term
| Why when you sell TS for above cost is it not a gain? |
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Definition
| Because there is only a gain when you sell an asset. Stock transactions cannot create gains/losses. |
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Term
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Definition
The date that the company declares the liability and writes it down.
R/E reduced, Dividend Payable Increased |
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Term
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Definition
| Date that establishes who gets the dividends. No entry |
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Term
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Definition
| Date that the liability is taken off the books and is paid. |
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