AC 210 Chapter 10 Stockholders' Equity Terms

Corporations

Businesses legally separate from their owners, formed under state laws

Articles of Incorporation

Documents that outline the company's activities, shares authorized, and initial board

Board of Directors

Group that sets company policies and appoints officers

Shareholders/Stockholders

Owners of a corporation who hold shares of stock

Limited Liability

The concept that stockholders are only liable for what they invest

Double Taxation

When corporate profits are taxed at both the corporate and individual level

Contributed Capital

Money invested by shareholders into the company

Authorized Stock

Shares a corporation is allowed to issue

Unissued Stock

Shares that have never been sold

Issued Stock

Share sold to investors (includes both outstanding and treasury stock)

Outstanding Stock

Shares held by investors that receive dividends

Treasury Stock

Shares repurchased by the company and a contra-equity account representing repurchased shares

Initial Public Offering (IPO)

The first time a company sells stock to the public

Par

The legal value assigned per share of stock

Additional Paid-in Capital (APIC)

The amount received above par value

No Par Stock

Stock that has no assigned par value

Preferred Stock

Type of stock that gives priority in dividends and liquidation

Dividends Preference

Advantage where preferred stockholders receive dividends first

Retained Earnings

Cumulative Profits minus dividends paid to stockholders

Dividends

Cash payments made to stockholders

Declaration Date

Date when dividends are officially announced

Record Date

Date used to determine which stockholders' equity will receive dividends

Payment Date

Date when dividends are actually paid

Statement of Stockholders' Equity (STSE)

Financial statement that summarizes changes in equity accounts over time

Earnings Per Share (EPS)

Measure of income earned per share of stock