Ch 11 Vocabulary Flashcards
(27 cards)
Accumulated other comprehensive income (AOCI)
The cumulative change in shareholders’ equity that results from the gains and losses that bypass profit (recorded in OCI) but affect shareholders’ equity. p 572
Authorized shares
The amount of share capital that a corporation is authorized to sell. the amount may be unlimited or specified. p 559
Cash dividend
A pro rata (proportional) distribution of cash to shareholders. p 566
Contributed capital
The total amount paid or contributed by shareholders in exchange for shares of ownership. It consists of share capital and additional contributed capital, if any. p 561
Corporation
A company organized as a separate legal entity, with most of the rights and privileges of a person. Shares are evidence of ownership. p 556
Cumulative
A feature of preferred shares that entitles the shareholder to receive current-year and unpaid prior-year dividends are declared before common shareholders receive any dividends. p 564
Declaration date
The date the board of directors formally declares (approves) a dividend and announces it to shareholders. p 566
Dividend yield
A measure of the percentage of the share price that is paid in dividends. It is calculated by dividing dividends per share by the share price. p 577
Dividends in arrears
Dividends that were not declared on cumulative preferred shares during a period. p 564
Initial public offering (IPO)
The initial offering of a corporation’s shares to the public. p 559
Issued shares
The portion of authorized shares that has been sold. p 559
Legal capital
The amount per share that must be retained in the business for the protection of corporate creditors. Equal to the proceeds received from the issue of most shares. p 560
Market capitalization
A measure of the fair value of a company’s equity. It is calculated by multiplying the number of shares by the share price at any given date. p 560
Noncumulative
Preferred shares that are entitled to the current, dividend, if declared, but not to any undeclared and unpaid amounts from prior years. p 564
Normal course issuer bid
The reacquisition of a specified percentage of a company’s own shares from the general public for a predetermined price and period, subject to regulatory approval. p 562
Other comprehensive income (OCI)
Gains and losses that affect shareholders’ equity but are not shown in profit or loss. They relate to complex transactions such as certain types of gains and losses on investments. p 572
Payment (distribution) date
The date dividends are paid or distributed to shareholders. p 567
Payout ratio
A measure of the percentage of the profit distributed in the form of cash dividends to common shareholders. It is calculated by dividing cash dividends by profit. p 577
Preferred shares
Share capital that has contractual preferences over common shares in certain areas. p 563
Profit available to common shareholders
Profit less the annual preferred dividend for cumulative preferred shares. The dividend is deducted for noncumulative preferred shares only if declared. p 579
Record date
The date when ownership of shares is determined for dividend purposes. p 567
Retained earnings restrictions
Circumstances that make a portion of retained earnings currently unavailable for dividends. p 572
Return on common shareholders’ equity
a measure of profitability from the shareholder’s point of view. It is calculated by dividing profit minus preferred dividends by average common shareholders’ equity (total shareholders’ equity minus preferred shares). p 580
Statement of retained earnings
A statement that summarizes the changes in the retained earnings account during the period. This statement is issued only by private companies reporting using ASPE. p 574
