Acct 11 - Chapter 13 Flashcards
Midterm (24 cards)
CASH DIVIDENDS
A pro rata (equal) distribution of cash to shareholders.
COMMON SHARES
Shares where the owners have the right to 1. vote on the election of the board of directors, 2. share in the distribution of profit through dividends, and 3. share any assets that remain after all debts and shares with priority rights have been paid. If the corporation has only one class of shares, they are common shares.
CONTRIBUTED CAPITAL
The total amount contributed by the shareholders. Consists of share capital and contributed surplus.
CONVERTIBLE PREFERRED SHARES
Preferred shares that the shareholder can convert into common shares at a specified ratio.
CORPORATION
A business organized as a separate legal entity, with most of the rights and privileges of a person. Shares are evidence of ownership.
CUMULATIVE
A feature of preferred shares that entitles the shareholder to receive current dividends and unpaid prior-year dividends before common shareholders receive any dividends.
DECLARATION DATE
The date when the board of directors formally declares a dividend and announces it to shareholders.
DEFICIT
A debit balance in the Retained Earnings account created when total losses and dividends to date are greater than total profit to date; it is reported as a deduction from shareholders’ equity.
DIVIDEND
A distribution of profit by a corporation to its shareholders on a pro rata basis.
DIVIDENDS IN ARREARS
Dividends on cumulative preferred shares that were not declared.
INITIAL PUBLIC OFFERING (IPO)
The initial offering of a corporation’s shares to the public.
LEGAL CAPITAL
The share capital that must be retained in the business for the protection of corporate creditors.
NO PAR VALUE SHARES
Share capital that has not been given a specific value. All the proceeds from the sale of no par value shares are treated as legal capital.
NONCUMULATIVE
Preferred shares that are entitled to the current dividend, but not to any unpaid amounts from previous years.
ORGANIZATION COSTS
Costs incurred in the formation of a corporation.
PAYMENT DATE
The date when cash dividends are paid to shareholders
RECORD DATE
The date when ownership of shares is determined for dividend purposes
REDEEMABLE (CALLABLE) PREFERRED SHARES
Preferred shares that give the issuer the right to purchase the shares from shareholders at specified future dates and prices.
RETAINED EARNINGS
Earned capital (cumulative profit less losses and amounts distributed to shareholders since incorporation) that has been retained for future use. If negative (a debit balance) it is called a “deficit”.
RETRACTABLE PREFERRED SHARES
Preferred shares that give the shareholder the right to sell the shares to the issuer at specified future dates and prices.
RETURN ON EQUITY
A measure of profitability from the shareholders’ point of view. It is calculated by dividing profit by average common shareholders’ equity.
SECONDARY MARKET
A market where investors buy and sell shares of public companies from each other, rather than from the companies.
SHARE CAPITAL
The amount paid, or contributed, to the corporation by shareholders in exchange for shares of ownership. It can consist of preferred and common shares.
STATEMENT OF RETAINED EARNINGS
A financial statement that shows the changes in retained earnings during the year, used only under ASPE
