Review of Financial Accounting Concepts

False (B)

Paid-in capital and retained earnings

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

<p>Separate Legal Entity = A corporation's distinct existence from its owners. Limited Liability = Stockholders are not personally liable for corporate debts. Transferable Ownership Rights = Stockholders can easily sell or transfer their shares. Retained Earnings = Cumulative net income not distributed as dividends.</p> Signup and view all the answers

<p>Hilton (C)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>High dividend yield indicates income stock, low dividend yield indicates growth stock.</p> Signup and view all the answers

<p>Corrections of <em>material</em> errors in previously issued financial statements, impacting the beginning balance of retained earnings. (D)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>market value</p> Signup and view all the answers

<p>The company is retaining earnings for potential growth initiatives. (A)</p> Signup and view all the answers

<p>$2.25</p> Signup and view all the answers

<p>earnings per share</p> Signup and view all the answers

<p>Net Income = Addition Cash Dividends = Deduction Prior Period Adjustment (Increase) = Beginning Balance Adjustment Prior Period Adjustment (Decrease) = Beginning Balance Adjustment</p> Signup and view all the answers

<p>$15,000 (C)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>3,000</p> Signup and view all the answers

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

<p>Either par or stated value of the shares, whichever is greater (A)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>Small Stock Dividend = Capitalize retained earnings for the market value of the shares to be distributed. Large Stock Dividend = Capitalize retained earnings for the par or stated value of the shares to be distributed. Stock Split = A distribution of additional shares of stock to stockholders according to their percent ownership.</p> Signup and view all the answers

<p>$800 (D)</p> Signup and view all the answers

<p>Par value is an arbitrary amount assigned to a share, while market price is what the stock sells for. (D)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>Debit Cash $300,000; Credit Common Stock $300,000</p> Signup and view all the answers

<p>To avoid a takeover or reissue to employees as compensation. (C)</p> Signup and view all the answers

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

<p>Debit Cash $360,000; Credit Common Stock $300,000, Credit Additional Paid-in Capital $60,000 (C)</p> Signup and view all the answers

<p>False (B)</p> Signup and view all the answers

<p>Debit Cash, Credit Common Stock (at issued price). (D)</p> Signup and view all the answers

<p>financial leverage</p> Signup and view all the answers

<p>Debit Cash $50,000; Credit Common Stock $40,000; Credit Additional Paid-in Capital $10,000 (C)</p> Signup and view all the answers

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

<p>Cumulative Preferred Stock = Dividends in arrears must be paid before common dividends Noncumulative Preferred Stock = Undeclared dividends are forfeited</p> Signup and view all the answers

<p>Paid-in (contributed) capital = Cash and other assets received in exchange for stock. Retained earnings = Cumulative net income (loss) not distributed as dividends.</p> Signup and view all the answers

<p>To avoid diluting the common stockholders' ownership and control while raising capital. (C)</p> Signup and view all the answers

<p>Debited from retained earnings or paid-in capital. (B)</p> Signup and view all the answers

<p>Debit Treasury Stock and credit Cash (B)</p> Signup and view all the answers

Financial information used by managers for decision making. It focuses on internal reporting and aids in planning and controlling operations.

The entitlements of stockholders, including voting, selling stock, purchasing additional shares, receiving dividends, and sharing in liquidation assets.

The maximum number of shares a corporation is legally allowed to sell as stated in its charter.

Total amount received by a corporation from its stockholders in exchange for stock, including cash and other assets.

Cumulative net income that is retained by a corporation instead of distributed as dividends to shareholders.

The price at which a share of stock trades in the market.

An arbitrary amount assigned to each share of stock upon authorization.

Shares with no assigned par value at issuance.

Stock that has a stated value but not a par value.

Issuing shares in exchange for assets other than cash.

Recording stock issuance and the related effects on accounts.

Price-to-Earnings ratio used to evaluate a company's stock value.

The annual cash dividends relative to the stock's market price.

Stocks that pay large, regular cash dividends to shareholders.

Stocks expected to grow in price but pay little or no dividends.

Foxburo is classified as an income stock due to its high dividend yield.

The balance of retained earnings at the end of a reporting period after net income and dividends are accounted for.

A financial metric that indicates the amount of profit attributed to each outstanding share of common stock.

Calculates basic EPS as (Net income - Preferred dividends) / Weighted-average common shares outstanding.

A ratio that measures a company's current share price relative to its earnings per share to gauge market expectations.

Corrections of material errors in financial statements that adjust the beginning balance of retained earnings.

A dividend where shares are distributed based on a smaller percentage of outstanding shares, affecting retained earnings at market value.

A dividend where shares are distributed based on a larger percentage of outstanding shares, affecting retained earnings at par value.

An account that represents the total value of stock dividends declared but not yet distributed to shareholders.

The transfer of amounts from retained earnings to common stock or additional paid-in capital when issuing stock dividends.

An increase in the number of shares outstanding created by splitting existing shares, which reduces the share price without changing total equity.

The date on which a company's board of directors announces a dividend payment to shareholders.

The date on which the declared dividends are actually paid out to shareholders.

Equity security with priority for dividends and assets over common stock.

To raise funds without diluting control and attract risk-averse investors.

Using preferred stock to increase returns to common shareholders.

Dividends owed to preferred shareholders from previous years must be paid before common dividends.

Preferred shareholders lose the right to unpaid dividends in any year; they are not carried forward.

Shares that a company has repurchased from shareholders, reducing total outstanding shares.

When a company buys its own shares, for example, at a certain price per share.

The process of distributing cash dividends between preferred and common shareholders.