Corporations: Organization and Capital Stock Transactions

Flashcards for key terms and definitions related to corporations and stock transactions.

Separate Legal Existence

An entity that is separate and distinct from its owners.

Limited Liability of Stockholders

Stockholders are only liable for the amount they invested in the corporation.

Transferable Ownership Rights

Shareholders can sell their stock to others without restrictions.

Ability to Acquire Capital

Corporations can raise funds by issuing stock.

Continuous Life

A corporation's existence is not affected by the withdrawal or death of any stockholder.

Corporate Management

Separation of ownership and management which affects how a corporation is run.

Government Regulations

Corporations are subject to various state and federal laws and regulations.

Additional Taxes

Corporations pay taxes as a separate legal entity, and stockholders are also taxed on dividends.

Paid-in Capital

The total amount of cash and assets contributed to the corporation by stockholders in exchange for shares.

Retained Earnings

Net income retained by the corporation for reinvestment or future use.

Treasury Stock

A corporation's own stock that it has reacquired from shareholders but not retired.

Par Value Stock

A stock with a nominal value set by the corporation's charter.

No-Par Value Stock

Stock that does not have a par value; often has a stated value assigned by the board of directors.

Common Stock

Equity ownership in a corporation that typically includes voting rights and a claim on earnings.

Preferred Stock

A class of stock that typically has priority over common stock in terms of dividends and assets upon liquidation.

Residual Claim

Right of stockholders to share in the assets of the corporation after all other claims have been satisfied.

Market Value

The price at which a stock is currently being bought or sold in the market.

Dividend

A portion of a corporation's earnings distributed to stockholders.

Cumulative Preferred Stock

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

Voting Rights

The rights of stockholders to participate in corporate decisions, typically through election of the board of directors.