Chapter_11_Lecture_Notes_1_

Corporation

A legal entity separate from its owners.

Limited Liability

Protection for stockholders, meaning they are not personally liable for the debts of the corporation beyond their investment.

Transferable Ownership Rights

The ability to sell or transfer ownership in the corporation easily.

Double Taxation

A disadvantage of corporations where income is taxed at both the corporate level and again as dividends to stockholders.

Common Stock Rights

Rights of common stockholders including voting, selling stock, and receiving dividends.

Authorized Shares

The number of shares that the corporate charter allows the corporation to sell.

Issued Shares

The total number of shares that have ever been sold by the corporation.

Outstanding Shares

The number of shares that have been issued and are still held by stockholders.

Market Value

The price at which stock is bought and sold, which can change daily.

Par Value

The minimum legal capital assigned to each share by the charter.

Dividends

Payments made by the corporation to its shareholders, typically as a reward.

Date of Declaration

The day the Board of Directors formally announces a dividend payment.

Preferred Stock

A class of stock that has special rights, such as priority for dividends.

Cumulative Preferred Dividends

Dividends that must be paid for every year before any dividends are paid to common stockholders.

Treasury Stock

Shares that were once a part of the outstanding shares but were later repurchased by the corporation.

Prior Period Adjustment

Corrections of material errors in previously issued financial statements.