Accounting for Corporations - Chapter 13

These flashcards cover key terms and concepts from Chapter 13 of 'Accounting for Corporations', focusing on the characteristics, management, and financial performance metrics of corporations.

Ownership Structure

Describes how ownership can be categorized into privately held and publicly held corporations.

Separate Legal Entity

A key characteristic of corporations that means the corporation exists independently from its owners.

Limited Liability

A benefit for stockholders where they are only liable for their investment in the corporation.

Dividends

Payments made to shareholders from a corporation’s earnings.

Common Stock

Type of stock that gives shareholders voting rights and equal claims on assets with other common stockholders.

Preferred Stock

A type of stock that generally does not have voting rights but has a higher claim on assets and earnings than common stock.

Cumulative Dividends

Dividends that must be paid on preferred stock before dividends can be paid on common stock.

Market Value

The price that shares of stock are bought and sold at in the market.

Par Value

An arbitrary value assigned to a share of stock when it is authorized, often used in accounting.

Treasury Stock

Shares of a company that have been repurchased by the company itself.

Earnings Per Share (EPS)

A measure of a company's profit divided by the number of outstanding shares of its common stock.

Price-Earnings Ratio (P/E)

A valuation ratio calculated by dividing the market value per share by earnings per share.

Dividend Yield

A financial ratio that shows how much a company pays out in dividends each year relative to its stock price.

Retained Earnings

The cumulative amount of net income that has been retained in the company rather than paid out as dividends.

Stock Dividends

Additional shares given to shareholders, typically to reduce the market price of the stock.

Stock Splits

An action taken by a company to divide its existing shares into multiple new shares to boost liquidity.