Chapter 8 flashcards

Question 1

how is the book value per share of a stock calculated

Answer 1

assets-liabilities /number of shares of stock owned by invesstors

Question 2

liquidation value of preferred stock

Answer 2

in case of bankruptcy they are paid before c/s holders

Question 3

how does DOD effect balance sheet

Answer 3

increased accurred dividends
decrease retained earnings

Question 4

how does DOR effect balance sheet

Answer 4

No entry

Question 5

how does DOP effect balance sheet

Answer 5

decrease cash
decrease accrued dividends

Question 6

what is date of declaration

Answer 6

date when dividend is accouncced

Question 7

date when dividend is record

Answer 7

the date shareholders must be on comapnies books to be elgible for dividend

Question 8

what is date of payment

Answer 8

date dividend is paid

Question 9

benfitis of propetorships and partnerships

Answer 9

ease of formation
direct profits
flexability
no additional taxes

Question 10

negatives of praetorships and partnerships

Answer 10

unlimited liablity
limited resources
no business continuity

Question 11

benefits of corporations

Answer 11

continuity
limited liability
access to capitol

Question 12

negatives of corporations

Answer 12

lots of regulation
complex
double taxation
not flexibility

Question 13

articles of incorperation

Answer 13

filed with agency
location
purpose
expected life
list of board of directors

Question 14

stock certificates

Answer 14

evidence of ownership of stock

Question 15

closely held corporation

Answer 15

corperation whos stock is exchanged by a few individuals

Question 16

securities act 1933

Answer 16

requires investors recive important financial information

Question 17

SEC

Answer 17

establishes accountting principals for corporations

Question 18

double taxation

Answer 18

taxes corporate profits on income and when dividends are reported

Question 19

levels of corp

Answer 19

owners
board
exec

Question 20

entranced management

Answer 20

ineffective management but bad policies make it hard to chnage

Question 21

withdrawl

Answer 21

distribution to owners of proprietors and partnerships

Question 22

legal capitol

Answer 22

amount of assets that should be mainted at protecton for creditors

Question 23

authorized stock

Answer 23

number of shares corperation is allowed to issue

Question 24

issued stock

Answer 24

stock sold to public

Question 25

treasury stock

Answer 25

stock bought back by corp

Question 26

outstanding stock

Answer 26

stock that is owned

Question 27

common stock

Answer 27

stock that carries no preferences
greatest reward and highest risk

Question 28

preferred stock

Answer 28

gets preferential treatement (dividend) no voting rights get dividend before C/S

Question 29

cumulative dividend (dividend in arrear)

Answer 29

prefferred dividends that accumulate from yr to yr

Question 30

stock split

Answer 30

increased number of stock shares
reduced market value of stock and par value of

Question 31

What is the Eps ratio

Answer 31

how profitable a company is on a per share basis

Question 32

what is price earning ratio

Answer 32

indicator of stocks growth potential