Equity Financing Module 5

Flashcards covering essential concepts from the Equity Financing lecture, specifically focused on dividends and retention earnings.

Retained Earnings

Net income earned by the company not paid out as dividends.

Dividends

Distributions to the owners (stockholders) of a corporation.

Cash Dividends

Cash distributions of earnings to stockholders.

Contra-equity account

An account that reduces equity; specifically, dividends reduce retained earnings.

Date of Declaration

The date the board of directors formally decides to pay dividends to stockholders.

Date of Record

The date a stockholder must own the stock to receive the declared dividend.

Date of Payment

The date on which a corporation pays dividends to its stockholders.

Preferred Stock Dividend

Calculated as par value per share multiplied by a fixed percentage.

Normal balance of dividends account

A debit.

Dividends payable

A liability created once a dividend is declared.