ACC Chapter 8

sole proprietorship

business owned by one person

partnership

business owned by two or more people

corporation

separate legal entity owned by stockholders

limited liability

owners are not personally responsible for company debts

double taxation

income taxed at corporate level and again to owners

stockholder

owner of a corporation

board of directors

group overseeing company operations

SEC

government agency regulating corporations and stock markets

FASB

organization that sets accounting rules

par value

minimum legal value assigned to stock

stated value

assigned value for no-par stock

market value

price investors pay for stock

book value per share

equity divided by number of shares

authorized stock

maximum shares allowed to issue

issued stock

shares sold to investors

outstanding stock

shares owned by investors

treasury stock

stock repurchased by the company

common stock

stock with voting rights and profit sharing

preferred stock

stock with priority in dividends and assets

cumulative dividends

unpaid dividends that carry over

paid-in capital

amount received above par value

cash dividend

distribution of cash to stockholders

declaration date

date dividend is declared

date of record

date determining who receives dividend

payment date

date dividend is paid

stock dividend

distribution of additional shares

stock split

increase in shares and decrease in price per share

retained earnings

accumulated profits kept in the business

appropriation

restriction of retained earnings for a purpose

price-to-earnings ratio

stock price divided by earnings per share

closely held corporation

company owned by few individuals

widely held corporation

company owned by many investors