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CHAPTER 11 - Coggle Diagram
CHAPTER 11
PREFERRED STOCK
favourable features
any dividends that are declared are first paid to preferred shareholders before being paid to common shareholders
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PAR VALUE
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protects creditors by specifying a permanent amount of capital that owners could not withdraw before a bankruptcy
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when stock with a par value is issued the par value x number of shares is credited to the stock account
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STOCKHOLDERS EQUITY
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earned capital
accumulated amount of all net income/loss since the organisation -- accumulated amount of dividends paid by the corporation since organisation
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STOCK SPLIT
distributes additional shares of stock to stockholders by "splitting" their existing shares into some multiple of additional shares
a stock split and a stock dividend both distribute additional shares of stock to stockholders but are accounted for differently
a stock dividend requires a journal entry and redistributes amounts within the stockholders equity section of a companys balance sheet
stock split does not require a journal entry nor does it change any amounts in the stockholders equity section
to record a stock split a corporation merely increases the number of outstanding shared and proportionately decreases the par value of each share
CHARTER
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details e.g. name, purpose types and numbers of shares of stock the corporation can issue
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DIVIDEND DATES
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date of record
the date on which a corporation records who owns its stock - owners of a company stock on the date of the record will receive any declared dividend - no journal entry is associated
date of payment
the date on which cash is paid to owners listed on the date of record - the payment of a dividend eliminates the liability created on the declaration date and reduces cash
CORPORATION
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advantages
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the ability to raise large amounts of capital because both small and large investors can easily purchase stock
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STOCK DIVIDENDS
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different from a cash dividend because it does not distribute any assets of the corporation to stockholders or change total stockholders equity