Accounting Chapter 11 Flashcards

A private corporation does not offer its stock for public sale and usually has few stockholders.

A public corporation offers its stock for public sale and can have thousands of stockholders.

<p>A corporation conducts its affairs with the same rights, duties, and responsibilities of a person.</p> Signup and view all the answers

<p>False</p> Signup and view all the answers

<p>The transfer of shares from one holder to another has no effect on the corporation unless it causes a change in the directors.</p> Signup and view all the answers

<p>A corporation's life continues indefinitely because it is not tied to the physical lives of its owners.</p> Signup and view all the answers

<p>Stockholders cannot bind the corporation to contracts since they do not have the power to act as agents.</p> Signup and view all the answers

<p>Stocks are attractive because buyers are not liable for corporate debt or actions and are usually transferred easily.</p> Signup and view all the answers

<p>Corporations are under government regulation and must meet certain incorporation laws.</p> Signup and view all the answers

<p>Incorporation is the process of creating a corporation by obtaining a charter from a state government.</p> Signup and view all the answers

<p>The board of directors oversees a corporation's affairs and is responsible for managing the company.</p> Signup and view all the answers

<p>The costs to organize a corporation, including legal fees and promoter's fees.</p> Signup and view all the answers

<p>A proxy is a document that allows stockholders unable to attend meetings to delegate their voting rights to another agent.</p> Signup and view all the answers

<p>The number of shares that a corporation's charter allows it to sell.</p> Signup and view all the answers

<p>The price at which stock is bought and sold is influenced by expected future earnings, dividends, growth, and other economic factors.</p> Signup and view all the answers

<p>Common stock is when all authorized shares have the same rights and characteristics.</p> Signup and view all the answers

<p>Par value stock is stock assigned a par value, which is an amount specified per share by the corporation.</p> Signup and view all the answers

<p>Minimum legal capital refers to the least amount that buyers of stock must contribute to the corporation.</p> Signup and view all the answers

<p>No-par value stock is not assigned a value per share by the corporate charter.</p> Signup and view all the answers

<p>Stated value stock is no-par stock to which directors assign a 'stated' value per share.</p> Signup and view all the answers

<p>Stockholder's equity is a corporation's equity consisting of paid-in capital and retained earnings.</p> Signup and view all the answers

<p>Paid-in capital is the total amount of cash and other assets received from stockholders in exchange for stock.</p> Signup and view all the answers

<p>Retained earnings are the cumulative net income not distributed as dividends to stockholders.</p> Signup and view all the answers

<p>Par value stock can be issued at par, at a premium, or at a discount.</p> Signup and view all the answers

<p>Amounts for both assets received and the par value stock issued are recorded.</p> Signup and view all the answers

<p>A premium occurs when stock is sold for more than its par value.</p> Signup and view all the answers

<p>Issuing stock at a discount occurs when it is sold for less than its par value.</p> Signup and view all the answers

<p>When issuing 1,000 shares at $40 per share, cash and common stock would both be credited for $40,000.</p> Signup and view all the answers

<p>Its stated value becomes legal capital and is credited to a stated value stock account.</p> Signup and view all the answers

<p>A corporation can receive assets other than cash in exchange for its stock.</p> Signup and view all the answers

<p>Decisions to pay dividends rest among the board of directors, who can choose to retain or distribute cash.</p> Signup and view all the answers

<p>The three important dates are declaration date, record date, and payment date.</p> Signup and view all the answers

<p>The date of declaration is when directors vote to declare and pay a dividend.</p> Signup and view all the answers

<p>The date of record is when stockholders are identified to receive dividends.</p> Signup and view all the answers

<p>The date of payment is when the corporation actually pays the dividends to stockholders.</p> Signup and view all the answers

<p>A retained earnings deficit arises when a corporation incurs cumulative losses and pays more dividends than earnings.</p> Signup and view all the answers

<p>A liquidating cash dividend returns a portion of the capital contributed by stockholders.</p> Signup and view all the answers

<p>Stock dividends are additional shares distributed to stockholders without any payment in return.</p> Signup and view all the answers

<p>Small stock dividends are distributions less than or equal to 25% of outstanding shares.</p> Signup and view all the answers

<p>Large stock dividends are distributions greater than 25% of outstanding shares.</p> Signup and view all the answers

<p>Stock splits occur when a corporation decides to split its stocks.</p> Signup and view all the answers