question

Under the corporate form of business organization,

answer

ownership rights are easily transferred

question

The date on which a cash dividend becomes a binding legal obligation is on the

answer

declaration date

question

The market interest rate related to a bond is also called the

answer

effective interest rate

question

The principal of the bond issue is paid back in installments

answer

serial bond

question

The value of a bond stated on the bond certificate

answer

face value

question

A measure of income earned by each share of common stock

answer

EPS

question

The legal contract between issuer and bond holder

answer

indenture

question

The entire principal of the bond is paid back on maturity date

answer

term bond

question

Allows the bond holder to exchange bond for shares of stock

answer

convertible bond

question

Allows the issuer to redeem bonds before maturity date

answer

callable bond

question

A disadvantage of the corporate form of business entity is

answer

corporations are subject to more governmental regulations

question

The excess of sales price of treasury stock over its cost should be credited to

answer

Paid-In Capital from Sale of Treasury Stock

question

The account used to record the difference when issue price exceeds par value of stock

answer

Paid-In Capital in Excess of Par

question

A class of stock that provides no preference rights to shareholders

answer

common stock

question

The number of shares sold to stockholders

answer

issued shares

question

A financial institution that records and maintains records of another company's stockholders

answer

transfer agent

question

The maximum number of shares a company can issue to stockholders

answer

authorized shares

question

The dollar amount assigned to each share of stock

answer

par value

question

The number of shares currently held by stockholders

answer

outstanding shares

question

A class of stock having first rights to dividends of a corporation

answer

preferred stock

question

All of the following are normally found in a corporation's stockholders' equity section except

answer

a) Paid-In Capital in Excess of Par b) Common Stock C) DIVIDENDS IN ARREARS d) Retained Earnings

question

The authorized stock of a corporation

answer

is indicated in its charter

question

A company whose shares are not bought or sold in public markets

answer

private corporation

question

Corporate income distributed to stockholders

answer

dividends

question

Creditors cannot pursue stockholders' personal assets to satisfy claims

answer

limited liability

question

The rules and procedures for conducting a corporation's affairs

answer

bylaws

question

Document which formally creates a corporation

answer

articles of incorporation

question

A legal entity, separate from the people who create and operate it

answer

corporation

question

Group which meets periodically to establish corporate policies

answer

board of directors

question

A company whose shares can be bought and sold in public markets

answer

public corporation

question

The journal entry a company records for the issuance of bonds when the contract rate is less than the market rate would be

answer

debit Cash and Discount on Bonds Payable; credit Bonds Payable

question

Treasury stock should be reported in the financial statements of a corporation as a

answer

deduction from stockholders' equity

question

The two main sources of stockholders' equity are

answer

investments by stockholders and net income retained in the business

question

Shares of common stock that were issued and then reacquired by a company

answer

treasury stock

question

The date that is used to determine the owners of stock who will receive the current dividend

answer

date of record

question

The day of the event that creates a liability to company

answer

date of declaration

question

Cash distribution of a company's earnings to stockholders

answer

cash dividend

question

The date when dividends are actually distributed to stockholders

answer

date of payment

question

Owners of this class of stock are entitled to receive dividends first

answer

preferred stock

question

Account used when shares are issued for an amount greater than par value

answer

Paid-In Capital in Excess of Par

question

Equity account reflecting shares "owed" to stockholders

answer

Stock Dividends Distributable

question

If bonds are issued at a discount, it means that the

answer

market interest rate is higher than the contractual interest rate

question

Treasury stock that had been purchased for $3,590 last month was reissued this month for $5,805. The journal entry to record the reissuance would include a credit to

answer

Paid-In Capital from Sale of Treasury Stock for $2,215 (5,805-3590)

question

If the market rate of interest is greater than the contractual rate of interest, bonds will sell

answer

at a discount

question

Treasury stock shares are

answer

issued shares that have been reacquired by a corporation

question

One of the main disadvantages of the corporate form is the

answer

double taxation of dividends

question

The term deficit is used to refer to a debit balance in which of the following accounts of a corporation?

answer

Retained Earnings

question

If common stock is issued for an amount greater than par value, the excess should be credited to

answer

Paid-In Capital in Excess of Par

question

If the market rate of interest is 10%, a $10,000, 12%, 10-year bond that pays interest semiannually would sell at an amount

answer

greater than face value

question

Selling the bonds at a premium has the effect of

answer

causing the interest expense to be lower than the bond interest paid

question

How is treasury stock shown on the balance sheet?

answer

as a decrease in stockholders' equity

question

The interest rate specified in the bond indenture is called the

answer

contract rate

question

Characteristics of a corporation include

answer

shareholders who have limited liability

question

A form of an interest-bearing note

answer

bond

question

The face amount of each bond

answer

principal

question

The return required by the market on the day of issuance

answer

effective rate

question

If the contract rate is less than the effective rate

answer

bond discount

question

If the contract rate exceeds the effective rate

answer

bond premium

question

The contract between bond issuer and bond purchaser

answer

bond indenture

question

The rate printed on the bond certificate

answer

contract rate

question

Earnings per share

answer

helps compare companies of different sizes, is the net income per common share, and must be reported by public company

ch 11-12 review – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards