Chapter 13- Corporations: Organization, Stock Transactions, and Dividends

stock

Shares of ownership of a corporation.

stockholders

owners of a corporation

stockholders' equity

The owners' equity in a corporation.

paid-in capital

Capital contributed to a corporation by the stockholders and others.

retained earnings

Net income retained in a corporation.

Dividends

Distribution of a corporation's earnings to stockholders.

deficit

A debit balance in the retained earnings account.

outstanding stock

The stock in the hands of stockholders.

par value

A dollar amount assigned to each share of stock.

common stock

The stock outstanding when a corporation has issued only one class of stock.

preferred stock

A class of stock with preferential rights over common stock.

Cumulative preferred stock

Stock that has a right to receive regular dividends that were not declared (paid) in prior years.

in arrears

A condition of being behind in regards to a financial obligation; said of preferred stock dividends that have not been paid in prior years.

premium

The stock outstanding when a corporation has issued only one class of stock.

discount

Stock that has a right to receive regular dividends that were not declared (paid) in prior years.

cash dividend

A cash distribution of earnings by a corporation to its shareholders.

stock dividend

A distribution of additional shares of stock to existing stockholders.

stock split

A process by which a corporation reduces the par or stated value of its common stock and issues a proportionate number of additional shares.

Treasury stock

Stock that a corporation has issued and then reacquired.

retained earnings statement

A summary of the changes in the retained earnings in a corporation for a specific period of time, such as a month or a year.

restrictions

Amounts of retained earnings that have been limited for use as dividends.

prior period adjustment

Corrections of material errors related to a prior period or periods, reported as an adjustment to beginning retained earnings and excluded from the determination of the current period's net income.

statement of stockholders' equity

A summary of the changes in the stockholders' equity in a corporation that have occurred during a specific period of time.

Earnings per share (EPS)

The profitability ratio that measures the share of profits that are earned by a share of common stock, computed by dividing net income, reduced by preferred dividend requirements, by the shares of common stock outstanding.