Question 1

Assets = Liabilities + Owners' Equity or Assets-Liabilities = Owners' Equity

Accepted Answer

What is the accounting equation?

Question 2

Amounts Invested by Shareholders (PIC)
Amounts Earned by the Corporation (RE)

Accepted Answer

What are the 2 sources of ownership interests?

Question 3

Common Stock
Retained Earnings
Accumulated Other Comprehensive Income
Treasury Stock

Accepted Answer

What are the 4 potential components of shareholders' equity?

Question 4

Common Stock

Accepted Answer

Amounts invested by shareholders when they purchase a company's stock, or from that company buying back some of those shares, or from share-based compensation activities

Question 5

Retained Earnings

Accepted Answer

A corporation's accumulated, undistributed, or reinvested net income (or net loss)

Question 6

Accumulated Other Comprehensive Income (AOCI)

Accepted Answer

Cumulative sum of the changes in each component of OCI accumulated over both current and prior periods

Question 7

Treasury Stock

Accepted Answer

Shares of previously-issued stock that have been repurchased but not retired by a corporation

Question 8

Statement of Stockholders' Equity

Accepted Answer

Changes in these accounts are reported in the ____________________________

Question 9

Retained Earnings in the Statement of Stockholders' Equity

Accepted Answer

If no/few changes, report changes ONLY to ___________ in a ____________________________

Question 10

Corporations are a separate legal entity
Limited Liability
Ease of raising equity capital
Not a mutual agency relationship

Accepted Answer

What are the characteristics of corporations?

Question 11

Lots of regulation
Double taxation

Accepted Answer

What are the disadvantages of corporations?

Question 12

Nature of the firm's business activities
Shares to be issued
Composition of the initial board of directors

Accepted Answer

What do the Articles of Incorporation describe? Hint there are 3

Question 13

Right to vote
Right to share in profits when dividends are declared
Right to share in distribution of assets upon liquidation
Preemptive Right-right to maintain % share ownership when new shares are issued

Accepted Answer

What ownership rights are held by common shareholders?

Question 14

First right to a specified amount or percentage of dividends, if dividends are paid
Preference to distribution of assets if the company is dissolved

Accepted Answer

What are the typical rights of preferred shares?

Question 15

Right of Conversion
Redemption Privilege
Cumulative or Non-Cumulative
Participating or Non-Participating

Accepted Answer

What are the other possible characteristics of preferred shares?

Question 16

Liability

Accepted Answer

A mandatorily redeemable financial instrument must be reported in the balance sheet as a ______________

Question 17

Fair Value

Accepted Answer

When shares are issued for noncash consideration, record the transaction at _________________

Question 18

Cash, & APIC

Accepted Answer

Share issue costs reduce net ______ proceeds and _________

Question 19

Deficit

Accepted Answer

A debit balance in retained earnings is called a __________

Question 20

Dividends

Accepted Answer

Distributions of assets a company generates on behalf of shareholders

Question 21

Liquidating Dividend

Accepted Answer

When a dividend exceeds the balance in Retained Earnings, debit the excess to APIC, not RE

Question 22

Declaration Date (liability) -> Ex-Dividend Date -> Date of Record (list) -> Payment Date (payment)

Accepted Answer

What are the important dates in order regarding dividends?

Question 23

Property Dividend

Accepted Answer

When dividends are paid with an asset other than cash

Question 24

Stock Dividend

Accepted Answer

Distribution of additional shares of stock to current shareholders of a corporation

Question 25

As a "large" stock dividend
As a stock split

Accepted Answer

A stock distribution of 25% or more can be accounted for in 2 ways:

Question 26

RE to PIC

Accepted Answer

For small (25% or less) stock dividends, FV of additional shares is transferred from _____ to ________

Term	Definition
Assets = Liabilities + Owners' Equity or Assets-Liabilities = Owners' Equity	What is the accounting equation?
Amounts Invested by Shareholders (PIC) Amounts Earned by the Corporation (RE)	What are the 2 sources of ownership interests?
Common Stock Retained Earnings Accumulated Other Comprehensive Income Treasury Stock	What are the 4 potential components of shareholders' equity?
Common Stock	Amounts invested by shareholders when they purchase a company's stock, or from that company buying back some of those shares, or from share-based compensation activities
Retained Earnings	A corporation's accumulated, undistributed, or reinvested net income (or net loss)
Accumulated Other Comprehensive Income (AOCI)	Cumulative sum of the changes in each component of OCI accumulated over both current and prior periods
Treasury Stock	Shares of previously-issued stock that have been repurchased but not retired by a corporation
Statement of Stockholders' Equity	Changes in these accounts are reported in the ____________________________
Retained Earnings in the Statement of Stockholders' Equity	If no/few changes, report changes ONLY to ___________ in a ____________________________
Corporations are a separate legal entity Limited Liability Ease of raising equity capital Not a mutual agency relationship	What are the characteristics of corporations?
Lots of regulation Double taxation	What are the disadvantages of corporations?
Nature of the firm's business activities Shares to be issued Composition of the initial board of directors	What do the Articles of Incorporation describe? Hint there are 3
Right to vote Right to share in profits when dividends are declared Right to share in distribution of assets upon liquidation Preemptive Right-right to maintain % share ownership when new shares are issued	What ownership rights are held by common shareholders?
First right to a specified amount or percentage of dividends, if dividends are paid Preference to distribution of assets if the company is dissolved	What are the typical rights of preferred shares?
Right of Conversion Redemption Privilege Cumulative or Non-Cumulative Participating or Non-Participating	What are the other possible characteristics of preferred shares?
Liability	A mandatorily redeemable financial instrument must be reported in the balance sheet as a ______________
Fair Value	When shares are issued for noncash consideration, record the transaction at _________________
Cash, & APIC	Share issue costs reduce net ______ proceeds and _________
Deficit	A debit balance in retained earnings is called a __________
Dividends	Distributions of assets a company generates on behalf of shareholders
Liquidating Dividend	When a dividend exceeds the balance in Retained Earnings, debit the excess to APIC, not RE
Declaration Date (liability) -> Ex-Dividend Date -> Date of Record (list) -> Payment Date (payment)	What are the important dates in order regarding dividends?
Property Dividend	When dividends are paid with an asset other than cash
Stock Dividend	Distribution of additional shares of stock to current shareholders of a corporation
As a "large" stock dividend As a stock split	A stock distribution of 25% or more can be accounted for in 2 ways:
RE to PIC	For small (25% or less) stock dividends, FV of additional shares is transferred from _____ to ________

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ACFM 322 Chapter 18