Directions: Number your answers and answer in complete sentences. 1. What are th

Question

Directions: Number your answers and answer in complete sentences. 

1. What are the two categories of Stockholder's Equity on the balance sheet?

2. What is the difference between the two categories?

3. What are the two classes of stock in a corporation?

4. Which class of stock is listed first? Why?

5. What is par value? Stated value?

6. What happens to the amount of cash that is invested in a corporation over the par/stated value?

7. What is treasury stock?

8. Explain the difference between authorized stock, issued stock, and outstanding stock.

9. What does a corporation have to do if it is incorporated in one state, but wants to carry out business in another?

10. What are the characteristics of the corporate form of business?

Explanation / Answer

1- there are two sections of stockholders equity (1) Paid in capital (2) Retained earning

2- Difference between the two is that Paid in capital is the amount paid by shareholders to acquire the ownership interest in the corporation whie retained earnings are the free accumulated profits.

3- There are two classes of stock in a corporation (1) common stock (2) preferred stock

4- preferred stock, it is listed first in the stockholders' equity section due to its preference in dividends and during liquidation

5-The par value of a stock is the stated value per share as outlined in the issuing company's charter. it is also called the face value because it's the value printed on the face of a bond or stock certificate, the par value of a stock represents the minimum amount that must be paid per share

6- Amount paid over the par value would be used as additional paid in capital- in excess of par

7- When the issued shares are repurchased by corporation from the shareholders are termed as treasury stock

8- When a corporation is formed, it authorizes a fixed number of shares of stock in the company.

Issued stock - Stock offered to public is termed as issued stock

outstanding stock- The number of shares actually trading in the market. it equals to issued stock- treasury stock

9- you can incorporate in another state and register as a foreign company in your home state.

10- Legal seperate entity, limited liability of shareholders to the amount unpaid

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.