Ch.14 Corporations: Dividends, Retained Earnings, and Income Reporting

What is Cash Dividend? A cash dividend is a pro-rata distribution of profits in the form of cash (from retained earnings) to stockholders. What is Declaration Date? Declaration date is the date on which the board of directors formally declares dividends and announces it to stockholders. What is Deficit? Deficit is a debit balance in retained earnings. What is Dividend? Dividend is a distribution of profits (net income) in the form of cash, stock, script, or properties or merchandise. Earnings Per Share (of Common Stock) EPS is a measure of profitability which shows the amount of net income earned by each share of outstanding common stock. This measure is used in computing the Price/Earnings ratio. Liquidating Dividend A liquidating dividend is a dividend declared out of Paid-in-Capital. Payment Date Payment date is the date on which checks are mailed to stockholders. Prior Period Adjustment Prior period adjustments are the correction of financial statements for errors that happened in previous accounting years. Record Date Record date is the date when ownership of outstanding shares is determined for dividends purposes. Retained Earnings Retained earnings is the shareholders’ equity account into which the net income is transferred from the Income Summary. The normal balance of retained earnings is credit. What is a Merger? Merger is the joining of two corporations in which one company acquires all the assets and liabilities of another corporation, which is then dissolved. What is Minority Interest? Minority interest is the portion of a subsidiary corporation’s stock owned by outsiders. What is ‘Parent Company’? A parent company is a corporation owning all or a majority of the voting stock of the other corporation. (576) What is P/E Ratio—Price-Earnings Ratio? The Price-Earnings ratio is the ratio computed by dividing a corporation’s stock market price per share at a specific date by the company’s annual earnings per share (EPS). What is Subsidiary Company? A subsidiary company is a corporation that is controlled by a parent company. What is Taxable Income? Taxable income is the income according to the tax laws that is used as a base for determining the amount of taxes owed. What are Temporary Differences? Temporary differences are differences between taxable income and income before income taxes (IBIT). The differences are created because items are recognized in one period for tax purposes and in another period for income statement purposes. Such differences reverse or turn around in later years. What are Temporary Investments? ‘Temporary investments’ is the balance sheet caption used to report investments in income-yielding securities that can be quickly sold and converted to cash as needed. What is Trading Securities? Trading securities are securities that management intends to actively trade for profit. What is Unrealized Gain or Loss? Unrealized gain or loss is the difference between the fair market value of the securities and their cost. Ch1 Accounting in Action Ch2 Recording Process Ch3 Adjusting the Accounts Ch4 Completing the Accounting Cycle Ch5 Merchandising Operations Ch6 Inventories Ch7 Accounting Information Systems Ch8 Internal Control and Cash Ch9 Accounting for Receivables Ch10 PP&E, Natural Resources, and Intangible Assets Ch11 Current Liabilities and Payroll Ch12 Partnerships Ch13 Corporations Ch14 Corporations:Dividends, RE Ch15 Long Term Liabilities Ch16 Investment Ch17 Statement of Cash Flows Ch18 Financial Statement Analysis Plato and Accounting Price/Earnings Ratio Plant Assets Luca Pacioli and DaVinci The secrets of 'no-doze' prose: Mary Duffy's Sentence Openers

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