Corporations
These are two primary advantages of the corporate form of business.
What are limited liability and the ability to raise capital?
This is the legal capital per share that is assigned when a corporation is first established.
What is par value?
This is the name for a company’s own issued stock that it has repurchased.
What is treasury stock?
Each periodic payment on an installment note consists of these two parts.
What are interest and a reduction of the principal (carrying value)?
This is a formal debt instrument issued by a company to borrow money from the public.
What is a bond?
This term describes a business entity that is legally separate from its owners and must pay its own income taxes.
What is a corporation?
If a company issues 1,000 shares of no-par common stock at $30 per share, this is the amount credited to the Common Stock account.
What is $30,000?
Treasury stock is recorded as this type of account, which reduces the total balance of stockholders' equity.
What is a contra equity account?
This is a contractual arrangement where an owner provides a user the right to use an asset for a specified period.
What is a lease?
This is the frequency with which bond interest is traditionally paid to investors.
What is semiannually (or twice a year)?
This disadvantage of corporations happens twice: once at the corporate level and once at the individual stockholder level.
What is double taxation (or additional taxes)?
This account is credited for the portion of the cash received above the par value when issuing stock.
What is Additional Paid-in Capital?
This is the date on which the board of directors announces a dividend, creating a binding legal obligation for the company.
What is the declaration date?
At the beginning of a lease, the lessee records the obligation to make future payments as this type of account.
What is a lease payable?
This type of bond features a provision that allows the issuing company to pay off or redeem the debt early, before its scheduled maturity date.
What is a callable bond?
This group of individuals is elected by stockholders and is responsible for determining the makeup of the company's management.
What is the Board of Directors?
These are the two ways preferred stock is "preferred" over common stock.
What are the first rights to dividends and preference in the distribution of assets if the company dissolves?
On this specific dividend-related date, no journal entry is required.
What is the record date?
A lease is recorded at this specific value of the future lease payments.
What is the present value?
This type of bond matures on a single specified date, rather than in installments over several years.
What is a term bond?
These are the two primary components of stockholders' equity.
What are paid-in capital and retained earnings?
This feature of preferred stock means that any dividends not declared in a given year must be paid in a later year before common stockholders receive any.
What is cumulative stock?
Because dividends are not paid on treasury stock, they are only calculated based on this specific type of shares.
What are outstanding shares?
This is one of the primary advantages of leasing an asset rather than purchasing it with an installment note.
What is reducing upfront cash (or flexibility/protection against declining values)?
These types of bonds are not backed by collateral and are instead based on the "full faith and credit" of the issuer.
What are unsecured bonds?