Stock Dividends and Splits Review

These flashcards cover key vocabulary related to stock dividends, stock splits, and their accounting implications.

Stock Dividend

Additional shares of stock issued to current shareholders based on the number of shares they own, without affecting assets or liabilities.

Retained Earnings

The portion of a company's net income that is retained rather than paid out as dividends.

Proportional Distribution

The principle that ensures each shareholder's percentage of ownership remains unchanged when stock dividends are issued.

Market Value

The price at which shares of stock are bought and sold in the marketplace.

Stock Split

An increase in the number of shares outstanding by issuing additional shares to current shareholders in a specific ratio.

Par Value

The nominal or face value of a share of stock, which is not reflective of its market price.

Cumulative Preferred Stock

Preferred stock that accumulates unpaid dividends, which must be paid before any dividends can be distributed to common stockholders.

Declaration Date

The date on which a company's board of directors approves the payment of a dividend.

Treasury Stock

Stock that has been repurchased by the company that issued it, not considered when calculating dividends.

Reverse Stock Split

A reduction in the number of a company's outstanding shares, increasing the share price.

Small Stock Dividend

A stock dividend that is less than 25% of the shares outstanding, recorded at market value.

Large Stock Dividend

A stock dividend that is 25% or more of the shares outstanding, recorded at par value.

Additional Paid-In Capital

A type of equity account that represents the amount shareholders have paid over and above the par value of the stock.