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Accounting 3332 > Chapter 15: Stockholders' Equity > Flashcards

Chapter 15: Stockholders' Equity Flashcards

1
Q

What are the sources of Stockholders’ Equity?

A
  • paid in capital
  • retained earnings
  • accumulated other comprehensive income
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2
Q

This source of stockholders’ equity represents the amounts invested by stockholders.

A

paid in capital

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3
Q

This source of stockholders’ equity is the amounts earned on behalf of shareholders.

A

retained earnings

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4
Q

This source of stockholders’ equity is non-owned charges in equity.

A

accumulated other comprehensive income

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5
Q

What are the share rights for common stockholders of paid-in capital?

A
  • voting rights
  • share in profits when dividends are declared
  • share in the distribution of assets if the company is liquidated
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6
Q

What are the share rights for preferred stockholders of paid-in capital?

A
  • dividend and liquidation preference over common stockholders
  • no voting rights
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7
Q

What are the preferred stock features in paid-in capital?

A
  • may be convertible into common stock
  • may be cummulative (dividends) or non cummulative
  • dividends
  • redeemable preferred stock
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8
Q

In preferred stock features, dividends can be a…

A
  • dollar amount per share or % of rate
  • unpaid dividends on cummulative preferred stock must be paid before distribution to common
  • dividends in arrears are disclosed in footnotes
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9
Q

In preferred stock features, what type of stocks have debt and equity features and classified as liability.

A

redeemable perferred stock

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10
Q

Accounting for the issuance of stock in paid-in capital include…

A
  • stock issued for cash
  • noncash stock transactions
  • share issue costs
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11
Q

In the issuance of stock, the cash investment that is allocated between stated capital (Par) and paid-in capital is what?

A

stock issued for cash

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12
Q

In the issuance of stock, this should be recorded at the fair value of either the share or the noncash consideration, whichever is more clearly evident.

A

noncash stock transactions

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13
Q

In the issuance of stock; legal, printing, and accounting fees necessary to sell shares are called what?

A

share issue costs

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14
Q

What do the share issue costs reduce?

A

proceeds and paid-in capital

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15
Q

What are the purposes of reacquisition of shares?

A
  • decrease supply of shares in the market to support price of remaining shares
  • increase earnings per share
  • to provide stock for stock compensation agreements
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16
Q

What kind of account is Treasury Stock?

A

contra equity account

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17
Q

How is Treasury stock reported?

A

as a reduction in equity

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18
Q

Type of method that is used for Treasury Stock?

A

cost method

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19
Q

Journal entry for acquisition (purchase) of Treasury stock?

A

Dr. Treasury stock

Cr. Cash

20
Q

Journal entry of Treasury Stock Above Cost?

A

Dr. Cash
Cr. Paid in Capital - TS
Cr. Treasury Stock (cost)

21
Q

Journal entry of Treasury Stock Below Cost?

A

Dr. Cash
Dr. Paid in Capital - TS
Cr. Treasury Stock (cost)

22
Q
  • accumulated undistributed income (loss)
  • all dividends are reduced to RE
  • restrictions reduce the amont of RE available for dividends
  • a debit balance in RE is considered a deficit
A

Nature of Retained Earnings

23
Q

All dividends reduce what account?

A

retained earnings

24
Q

If retained earnings have a debit balance they are considered to be a what?

A

deficit

25
Q

What are the 3 types of dividends?

A
  • cash
  • property
  • stock
26
Q

When are registered owners entitled to dividends?

A

on the date of declaration

27
Q

No dividends are declared and paid on…

A

treasury stock

28
Q

Journal entry for cash dividends at declaration date.

A

Dr. Retained Earnings

Cr. Cash dividends payable

29
Q

How are property dividends recorded?

A

recorded at FMV, resulting in a gain/loss

30
Q

Journal entry for property dividends.

A

Dr. Retained Earnings

Cr. Property Dividends payable

31
Q

When do we need to adjust the asset to FMV and record a gain or loss?

A

before declaration

32
Q

What are the 2 stock distributions?

A
  • stock dividend

- stock split

33
Q

In stock dividends, additional shares are distributed to existing…

A

shareholders

no individual shareholder % changes

34
Q

In stock dividends, each shareholder’s percentage ownership…

A

does not change

35
Q

What is the percentage range for small stock dividends?

A

less than 20% - 50%

36
Q

The ___ of the additional shares is distributed from ___ to ___.

A

fair value ; retained earnings ; Paid-In Capital

37
Q

Journal entry for Small stock dividends.

A

Dr. retained earnings
Cr. common stock
Cr. Paid in capital - common

38
Q

What is the percentage rage for large stock dividends?

A

more than 20%-50%

39
Q

The ___ of the additional shares diestributed is transferred from ___ to ___.

A

par value ; retained earnings ; common stock

40
Q

Journal entry for large stock dividends.

A

Dr. retained earnings (par)

Cr. Common Stock (par)

41
Q

Journal entry for stock split.

A

No journal entry (adjusted par value and number of shares, total common stock stays the same.), only if the company decides to change the par value,

42
Q

What type of example is this:
100 shares at $2 = $200
200 shares at $1 = $200

A

2 for 1 split

43
Q

When is a stock split effected in the form of a stock dividend?

A

when a company does not change par value.

44
Q

Journal entry for stock split effected in the form of a stock dividend.

A

Dr. retained earnings (par)

Cr. common stock (par)

45
Q

What is an example of a stock split that is effected in the form of a 100% stock dividend?

A

100 shares at $2 = $200

200 shares at $2 = $400

46
Q

Stock split usually has no ___ because ___.

A

journal entry ; common stock stayse the same

Accounting 3332 (10 decks)

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