Owners of common stock (stockholders, share holders) have the following rights:
A voice in management
Dividends: proportional share of the distribution of profits
Residual Claim: proportional share of the distribution of remaining assets upon the liquidation of the company
What are authorized shares?
the authorized number of shares are the max number of shares of stock a corporation can issue as specified in its charter.
Types of shares
Issued shares
Outstanding Shares- owned by stockholders
Treasury shares- reacquired by the corporation
Unissued shares
Authorized number of shares is the max number of shares a corporation can issue.
What is Earnings Per Share?
EPS= Net Income*/ Weighted Average Number of Common Shares Outstanding
-preferred dividends, if any, should be subtracted from net income
What is par value?
-The nominal value per share, established in the corporate charter.
-it does not = market value
How does sales of stock work for investors?
Investors can sell shares of stock to other investors and do not direct affect the corporation.
What is treasury stock?
-Treasury stock is stock that has been repurchased and is held by the issuing corporation.
-they have no voting, dividend, or stockholder rights while they are held as treasury stock
-a contra equity account
What are the key dividend dates?
Date or declaration
Date or record
Date of payment
What is date of declaration?
Date on which Board of Directors approve the dividend
What is date of record?
Stockholder's who own shares on this date will receive the dividend.
What is date of payment
The date the cash is dispersed to stock holders.
What are small stock dividends?
-stock dividend < 20-25%
-record at current market value of stock
What are large stock dividends?
-stock dividends > 20-25%
-record at par value of stock
What is a stock split?
-not recorded in journal entries.
-they change par value per share but the total par value is unchanged.
