Stock Types, Dividends, Splits and Treasury Stocks: ACC 291 Summary – LT B, Week 1-3

Summary

Stocks, dividends, splits and treasury stocks are explained. A student learns about how companies use them to raise money and reward shareholders.

Common and Preferred Stock

Common and preferred stock are two types of stock that companies issue. The differences between them affect the rights and returns of stockholders.

Dividends and Stock Splits

Dividends can be paid in cash or stock. Stock splits change the number of shares but not the value of the company. Both affect stockholders' equity and assets differently.

Treasury Stock Transactions

Treasury stocks are a company's own shares that it has bought back. The cost method records these transactions, affecting the treasury stock and paid-in capital accounts.

Generating Cash

Companies can generate cash through issuing stocks or bonds. Each method has different implications for shareholders and the company's financial structure.

Key terms

Common stock

A type of stock that gives stockholders part ownership and voting rights.

Preferred stock

A type of stock that gives stockholders priority in dividends and liquidation.

Stock dividend

A dividend paid in the form of additional shares of stock.

Stock split

A corporate action that increases the number of shares outstanding.

Treasury stocks

Shares that a company has bought back from shareholders.

Cost method

A method of recording treasury stock transactions.

Questions this document helps with

• What are the main differences between common and preferred stock?
• How do stock dividends and stock splits affect shareholders?
• What happens when a company buys back its own shares?

Summary written with AI from the document's text.