From page 10-1 of the VLN, when a company sells shares of stock, those shares of stock are said to be: Group of answer choices A. Authorized shares B. Issued shares C. Outstanding shares D. Treasury shares
From page 10-1 of the VLN, when a company sells shares of stock, those shares of stock are said to be: Group of answer choices A. Authorized shares B. Issued shares C. Outstanding shares D. Treasury shares
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
From page 10-1 of the VLN, when a company sells shares of stock, those shares of stock are said to be:
Group of answer choices
A. Authorized shares
B. Issued shares
C. Outstanding shares
D. Treasury shares

Transcribed Image Text:Treasury Stock:
PREFERRED STOCK
-Not normally voting
-Preference in dividends
-Fixed dividend rate (% of par or specified amount)
-Cumulative (dividends in arrears)
-Convertible
-Redeemable
-Mandatory Redeemable preferred stock is treated as debt on the
balance sheet
Par value or Stated value
-legal capital
-not market value
Paid-In Capital
-Preferred stock (PAR Value x number of shares ISSUED)
-Common Stock (PAR VALUE x number of shares ISSUED)
- Additional Paid-in Capital “APIC" or Capital in excess of Par
No-par Stock
Paid in capital all goes into common stock
Practice
A firm issues 50,000 shares of $0.10 par common stock for $10 per
share, record the issuance.
A firm issues 50,000 shares of $100 par preferred stock for $110
per share, record the issuance.
A firm issues 50,000 shares of no par common stock for $10 per
share, record the issuance.
TREASURY STOCK
-Contra Equity (reduces SEà does NOT reduce common stock)
-Issued but NOT outstanding
-Recorded at COST
-No voting rights
-No dividend or distribution rights
Economic Gain on sale of Treasury Stock (Resold for more than
cost)
-not shown as a GAIN
-increase Additional paid in capital
Economic Loss on sale of Treasury Stock (Resold for less than
cost)
-not shown as a LOSS
-decrease Additional paid in capital if available, or, if not available
-decrease Retained Earnings

Transcribed Image Text:OWNERSHIP OF A CORPORATION
Overview of Stockholders' Equity
-Source of financing (A= L+ SE)
-Ownership of the corporation (A-L=SE)
Stockholders' Equity on the Balance Sheet
Paid-in Capital + Retained Earnings – Treasury stock
PART A: Invested Capital (Paid-in Capital)
Invested capital is the amount of resources contributed to a
company by its owners.
Corporations
StockholdersàBoard of DirectorsàCEO
Initial Public Offering (IPO)
STOCKHOLDER RIGHTS: to vote, receive dividends, and share
in the distribution of assets
ADVANTAGES of a CORPORATION
-limited liability
-ability to raise capital and transfer ownership
DISADVANTAGES of a CORPORATION
-double taxation
-SEC regulation requirements
STOCK (Common Stock and Preferred Stock)
Number of Shares
Authorized Shares:
Issued Shares:
Outstanding Shares:
Unissued Shares:
Treasury Stock:
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