Chapter 13 Vocabulary

Chapter 13 Vocabulary - The primary objectives in...

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Chapter 13 Vocabulary Listed below are terms that will be helpful to understanding the material. These words will enable you to apply the vocabulary to the subject matter. A corporation is an entity created by law that is separate and distinct from its owners and its continued existence is dependent upon the corporate statutes of the state in which it is incorporated. Costs incurred in forming a corporation are called organization costs. Authorized stock is the amount of stock a corporation is allowed to sell as indicated by its charter. Par value stock is capital stock that has been assigned a value per share in the corporate charter. No-par stock is capital stock that has not been assigned a value in the corporate charter. Paid-in capital is the investment of cash and other assets in the corporation by stockholders in exchange for capital stock. Retained earnings is net income retained in a corporation.
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Unformatted text preview: The primary objectives in accounting for the issuance of common stock are to (a) identify the specific sources of paid-in capital and (b) maintain the distinction between paid-in capital and retained earnings. Treasury stock is a corporation’s own stock that has been issued, fully paid for, and reacquired but not retired. Preferred stock has contractual claims that give it priority over common stock. A cumulative dividend provides that preferred stockholders must be paid both current and prior year dividends before common stockholders receive any dividends. Preferred dividends not declared in a given period are called dividends in arrears. Capital stock consists of preferred and common stock. Additional paid-in capital includes the excess of amounts paid in over par or stated value and paid-in capital from treasury stock....
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