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About this document
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- 8 pages
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- $8 one-time, yours to keep
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- Format
- Subject
- Accounting, Business
- Module
- ACC291 · Week 4
This quiz covers corporate stock, dividends, and legal capital. It is useful for students preparing for their Week 4 quiz in ACC291.
What's inside
- Liability of stockholders
- Advantages and disadvantages of corporations
- Legal capital and treasury stock
- Rights of preferred stockholders
- Earnings per share and return on equity
Who it is for: Students taking ACC291 in Week 4. (Undergraduate)
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Summary
Corporate stock and dividends are explained. Students get practice questions on these topics.
Stockholder liability
Corporate stock is discussed. The liability of stockholders is limited to their investment. This is compared to proprietorships and partnerships.
Capital acquisition and regulation
Corporations can acquire capital more easily than proprietorships and partnerships. Disadvantages of the corporate business form are also considered.
Legal capital and treasury stock
Legal capital is calculated. Reasons for a company to acquire treasury stock are given. The effect of treasury stock on earnings per share is explained.
Dividends and stockholders' equity
Dividends to preferred and common stockholders are discussed. The payout ratio and return on common stockholders' equity are calculated.
Key terms
- Legal capital
- The par value per share times the number of shares issued.
- Treasury stock
- Stock that a company has bought back from shareholders.
- Earnings per share
- A company's profit divided by the number of shares outstanding.
- Payout ratio
- The percentage of net income paid out as dividends to common stockholders.
- Return on common stockholders' equity
- The return on the investment of common stockholders.
- Preferred stock
- A class of stock with priority in dividends and assets in liquidation.
Questions this document helps with
- What is the liability of a stockholder in a corporation?
- How does a corporation acquire capital?
- What is the effect of treasury stock on earnings per share?
Summary written with AI from the document's text.
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