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Chapter 10- Shareholders' Equity

Chapter 10- Shareholders' Equity - BUSI 1004 ACCOUNTING...

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1 BUSI 1004 INTRODUCTION TO FINANCIAL  ACCOUNTING Chapter 10- Reporting and analyzing shareholders’ Equity
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Objectives Describe the characteristics of common and preferred shares. Explain the accounting for shares when issued and repurchased; when dividend is declared and paid. Explain the impact of stock splits.
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3 Agenda Composition of Shareholders’ Equity Contributed capital Preferred shares Common shares Cash dividends
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Composition of Shareholders’ Equity on the Balance Sheet Shareholders’ Equity: Contributed capital Preferred Shares Common Shares Retained earnings Contributed surplus 4
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5 Agenda Composition of Shareholders’ Equity Contributed capital Preferred shares Common shares Cash dividends
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Preferred shares Typically non-voting shares Carry a fixed dividend per share (as a % of stated value or as a $ amount per share). Dividend is at the discretion of the company’s board of directors. Can be cumulative or non-cumulative If cumulative : when a dividend is declared, any dividend in arrears (not declared in previous years) must be paid to preferred shareholders before common shareholders are paid any dividend.
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