Chapter Questions
What is meant by 'separate legal entity' with regard to corporations?
List three advantages and disadvantages of organizing a corporation.
What does authorized stock mean?
How does issued stock differ from capital stock?
Define outstanding stock.
What is meant by preemptive right? List the other three shareholders' rights.
What is an underwriter? Give an example of an underwriter.
Briefly define issue price and how it relates to par value.
What is the difference between premium and discount?
What is meant by dividend in arrears?
What are the three relevant dates involving cash dividends? Describe each.
How does small stock dividend differ from a large stock dividend?
What is a stock dividend?
What is the effect on the accounting equation when a stock dividend is declared? What is the effect on the accounting equation when a stock dividend is distributed?
What are some reasons corporations issue stock dividends?
What is a stock split?
What is treasury stock? What type of account is Treasury Stock, and what is the account's normal balance?
Where and how is treasury stock reported on the balance sheet?
What does the statement of retained earnings report?
What is a prior-period adjustment?
What does the statement of stockholders' equity report? How does the statement of stockholders' equity differ from the statement of retained earnings?
What does earnings per share report, and how is it calculated?
What is the price/earnings ratio, and how is it calculated?
What does the rate of return on common stock show, and how is it calculated?