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Lear
n
i
O bj e n g
c
tive
Desc
corp
ribe
or
th
he n
rate
atur
form
e of
of or
th e
ga n i
zatio
n

Characteristics of a Corporation

o A _____________

is a _____________ entity,
_____________ and separate from the
_____________ who create and operate it.
As a legal _____________ , a _____________
may _____________ , _____________ , and
dispose of property in its own
_____________ .

o A _____________ sells shares of

_____________ , called _____________ .

Characteristics of a _____________

o The _____________ or _____________ who

own the _____________ own the corporation.

They can buy and sell _____________
without affecting the _____________
_____________ or continued existence.

Characteristics of a Corporation

o _____________ whose _____________ of stock

are traded in public markets are called
_____________ _____________ .

Characteristics of a Corporation

o Corporations whose shares are

_____________ traded publicly are usually

_____________ by a small group of
_____________ and are called _____________
or _____________ corporations. The
stockholders of all corporations have
_____________ _____________ .

Characteristics of a Corporation

o The stockholders control a corporation by

_____________ a ______ of _______ . This
board meets _____________ to establish
_____________ policy. It also _____________
the _____________ _____________
_____________ (CEO) and other major
officers.

CHARACTERISTI
CS OF A
CORPORATION

Characteristics of a Corporation

o _________________________________________

_________________________________________.

o _________________________________________

_________________________________________.

o _________________________________________

_________________________________________.

o _________________________________________

_________________________________________.

_____________ a Corporation

o The first step in forming a corporation is to

________ an ________ of_________ with the
state.
_____________________________________

_____________________________________.

_____________________________________

_____________________________________.

Forming a Corporation

o After the application is approved, the state

grants a charter or articles of
incorporation, which formally create the
corporation.

o Management and the board of directors

then prepare bylaws which are operating

rules and procedures for conducting the
corporations affairs.

Forming a Corporation

o _________ may be _________ in organizing a

corporation, such as ____ fees, _________ ,
__________ fees, and _________ costs .

Lear
n
i
O bj e n g
c
Desc
tive
r i be
th e
tw
o ma
of st
i n so
ockh
urce
olde
s
rs e
quit
y

Stockholders Equity

o The _____ equity in a _________ is called

_______ equity, _________ equity, _______

investment, or _____________.

STOCKHOLDERS EQUITY
Stockholders equity
is reported by its two
main sources.

Capital contributed
to the corporation
by the stockholders,
called paid-in capital
or _________ capital.

Net income retained

in the business,
called _________
_________.

Stockholders Equity

If there is only one class

of stock, the account is
entitled _________
_________ or _________
_________.

Stockholders Equity

o _________ _________ is a corporations

_________ net income that has not been

_________ as _________ .

o _________ are _________ of a corporations

_________ to _________ .

Stockholders Equity

o A _________ balance in _________ _________

is called a deficit. Such a balance often

results from _________ _________ _________ .

o A _________ balance in Retained Earnings

_________ _________ _________ surplus cash

or _________ _________ _________ for
dividends.

Lear
n
i
O bj e n g
c
t
i
v
D
ch a r
e s cr
e
ac t e
ibe a
s
r
ristic
t o ck
n
, a nd
s of d illustr
stoc
at e
e ntr
k
the
, cla
ies f
s
or is
suin ses of
g s to
ck

Characteristics of Stock

o The _________ of _________ of stock that a

corporation is _________ to _________
_________ is stated in the _________ .

o The term _________ refers to the shares

_________ to the _________ .

o A corporation may _________ some of the

stock that has _________ _________ . The

stock remaining in the _________ of
_________ is then called _________ _________ .

Characteristics of Stock

o Corporations may issue stock _________ to

stockholders to document their _________ .

o Shares of stock are often assigned a

_________ _________ , called _________ value.

Characteristics of Stock

o Stock issued _________ _________ is called

no-par stock. Some states require the

_________ of _________ to assign a _________
value to
____-_____ stock .

o Some state laws require that corporations

maintain a _________ stockholder
_________ , called legal______ , to protect
_________ .

Characteristics of Stock

o The major _________ that accompany

_________ of a _________ of _________ are as

follows:
___________________________________________.
___________________________________________.
___________________________________________.

Classes of Stock

o The two _________ _________ of paid-in

capital are _________ stock and _________

stock.

o The _________ attractiveness of _________

stock is that it is given a preference to
_________ over _________ stock.

_________ of Stock

o The payment of _________ is authorized by

the corporations _________ of directors.

o When _________ , the directors are said to

have _________ a dividend.

Classes of Stock

o ____________ _________ _________ has a right

to receive regular dividends that were
declared (_____) in _________ years.
_________ _________ stock does _________

_________ this right.

_________ _________ stock dividends that have

not been _________ in prior years are said to be

___ _________ .

Classes of Stock

o A corporation has issued the following

preferred and common stock:

1,000 shares of $4 cumulative preferred stock, $50

par 4,000 shares of common stock, $15 par

o The corporation was organized on January

1, 2012, and paid no dividends in 2012 and

2013. In 2014, the corporation paid $22,000
in dividends, of which $12,000 was paid to
preferred stockholders and $10,000 was
paid to common stockholders.

Classes of Stock

Dividends available to ________ stockholders

_________ Stock

o If the stock is _________ (sold) for a

_________ that is _________ than its

_________ , the stock has been sold at a
_________ .

o If the stock is _________ (sold) for a

_________ that is _________ than its

_________ , the stock has been sold at a
_________ .

_________ Stock

o Some states require that the entire

_________ from the issue of _________ stock

be recorded as _________ _________ . In
other states, no-par stock may be
_________ a _________ _________ per
_________ .

Lear
n
i
O bj e n g
c
tive
Desc
ribe
acco
an
u
n
ntin
g for d illustr
ate
c as h
th e
an d
d
i
vide
stoc
n ds
k d iv
iden
ds

_________ Dividends

o A cash distribution of earnings by a

corporation to its stockholders is called a

_________ _________ . The three conditions a
corporation must meet to pay a _________
dividend are as follows:
_____________________________
_____________________________
_____________________________

Cash Dividends

o The _________ of _________ is the date the

board of directors formally _________ the

_________ of the dividend. On this date, the
corporation incurs the _________ to pay the
amount of the dividend.

Cash Dividends

o The _________ of _________ is the date the

corporation uses to determine which
_________ will _________ the dividend.

Cash Dividends

o The _________ of _________ is the date the

corporation will _________ the dividends to

the _________ who owned the stock on the
_________ of _________ .

_________ Dividends

o A _________ of _________ to stockholders in

the form of the firms own shares is called

a _________ _________. Stock dividends
normally are _________ only on _________
stock and _________ to _________
stockholders.

Stock Dividends

o Before and After Stock Dividend

Distribution

After __%
Before
Stock Dividend Stock Dividend
Total shares issued

_____ + (_____ x __%)

Stock Dividends

o Before and After Stock Dividend

Distribution

Total shares issued

Number of shares owned
by one stockholder

After 6%
Before
Stock Dividend Stock Dividend
10,000
10,600

_____ + (_____ x __%)

Stock Dividends

o Before and After Stock Dividend

Distribution

Total shares issued

Number of shares owned
by one stockholder
Proportionate ownership

After 6%
Before
Stock Dividend Stock Dividend
10,000
10,600
1,000
___%

1,060
___%

_____ _____ _____ _____

Lear
n
i
O bj e n g
c
tive
Desc
ribe
acco
an
u
n
ntin
g for d illustr
ate
trea
th e
sury
stoc
tran
k
sact
ions

Treasury _________ Transactions

o _________ stock is stock that a corporation

has _________ and then _________ . A
corporation may _________ its own stock
for a variety of reasons, including the
following:
_________________________________
_________________________________
_________________________________

Lear
n
i
O bj e n g
c
t
ive
D
e
scrib
repo
rtin
e an
g of

n
stoc d illustr
khol
a
ders te the
equ
i ty

Reporting Stockholders Equity

o Exhibit 4 shows two methods for reporting

stockholders equity for the December 31,
2014, balance sheet of Telex Inc.

o In the first method, _____ _____ of stock is

reported, followed by its _____ _____ _____
accounts. _____ _____ is then reported,
followed by a _____ for _____ _____ .

Reporting Stockholders Equity

o In the second method, the _____ accounts

are reported, followed by the paid-in
________ reported as a _____ _____ ,
Additional paid-in capital. __________
__________ is then reported, followed by a
__________ for _________ stock.

Reporting Retained Earnings

o Changes to _____ _____ may be reported

using one of the following:

____________________________________________
____________________________________________
____________________________________________

Restrictions

o The _____ _____ _____ for use as dividends

may be __________ by action of a
corporations _____ of _____ .

o These amounts, called __________ or

appropriations, remain part of the

_________ _______ . However, they must be
_____ , usually in the _____ to the financial
statements.

__________________

o Restrictions of retained earnings are _____

as follows:

_______: State laws may require a _______ of

retained earnings.

__________: A corporation may enter into _______

that require _______ of retained earnings.

____________: A corporations _______ of _______

may restrict retained earnings voluntarily.

_______ Period Adjustments

o Errors may _______ be _______ within the

same period in which they occur. The

_______ of this type of _______ , called a
prior _______ _______ , is reported in the
_______ _______ statement as an _______ to
the _______ balance of retained earnings.

Statement of _______ Equity

o When the _______ change to stockholders

equity is due to net _______ or net _______
and _______ , a retained earnings
statement is sufficient.

o When a corporation also has changes in

_______ and paid-in _______ accounts, a
_______ of _______ _______ is normally
prepared.

Lear
n
i
O bj e n g
ctive
Desc
spli ribe the
its o
n

e eff
ect o
corp
f sto
orat
ck
e fin
state ancial
men
ts

Stock _______

o A _______ split is a process by which a

corporation _______ the par or _______

_______ of its _______ stock and issues a
_______ number of _______ shares.

Lear
n
i
n
g
O
b
j
e
Desc
c
t
ribe
ive
a nd
earn
illus
i ng
s pe
r sha trate the
a co
re in
use
m pa
of
e
valu
nys
profi ating
tabi
lity

_______ per _______

o _______ per _______ _______ (EPS),

sometimes called _______ _______ per _____,

is the net _______ per _______ of common
stock _______ during a period.

o _______ per _______ is computed as follows:

Earnings per Share =

:
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