Chapter 10 - Stockholders’ Equity

These flashcards cover key vocabulary terms and definitions related to stockholders' equity as discussed in Chapter 10.

Corporation

A corporate form of business that limits stockholders’ liability to the amount they invested.

Common Stock

Shares that represent ownership in a corporation and have voting rights in corporate decisions.

Preferred Stock

Stock that has preference over common stock in receiving dividends and in asset distribution upon liquidation.

Treasury Stock

Shares that were once a part of the outstanding shares but were later repurchased by the company, reducing stockholders' equity.

Retained Earnings

Cumulative amount of net income retained in the business after dividends have been paid.

Dividends

Portion of a company's earnings distributed to shareholders in cash or additional stock.

Par Value

Nominal value assigned to shares; historically set to indicate legal capital but often has no current significance.

Stock Split

An increase in the number of outstanding shares, which reduces the stock price without affecting the company’s market capitalization.

Ownership Rights

Basic rights that include voting, the right to dividends, and the right to sell shares.

Market Value

The price that investors are willing to pay for a company's stock, which can differ from book value.