ACCT 200 Outline of Last Lecture I. Current LiabilitiesII. Contingent LiabilitiesIII. Long Term LiabilitiesIV. Equity FinancingOutline of Current Lecture I. Stock termsII. Treasury stockIII. 3 terms for stocksIV. Debt to Equity RatioV. LeverageCurrent LectureI. Stock termsa. Preferred—paid firstb. Common—paid what is leftover after preferred are paidc. Investment Assets—when one company buys stock in another companyd. Contra Equity (negative balance)—when a company buys its own stocka company never pays a dividend to itselfe. Par value—minimum value a share can be issued atf. Market price > Par Valueg. **Market Price – par value = additional paid in capital (excess of par)h. Par—owner’s equityThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.i. Market price—cash receivedj. Authorized—all possible stock that is availablek. Issued—shares actually soldl. Outstanding—shares still in the stockholders’ handsm. Issuing stock is NOT revenuen. Market price per share=total cash received/shares issuedo. Additional paid in capital=market price per share – par per shareII. Treasury stocka. Shares repurchased by a corporationthis is done so the company can provide shares as compensation to its employeesb. Issued – Treasury = Outstandingc. Treasury stock is always recorded at the cost of what the company paid to reacquire it (*par does not matter for treasury stock)III. 3 terms for stocksa. date of declaration—incurs liability for dividendb. date of record—corporation lists stockholders who will get the dividend—no accounting takes place herec. corporation distributes dividends in cash (decrease cash, decrease dividends payable)IV. Debt to Equity Ratioa. Debt to equity ratio=total liabilities/total equityV. Leveragea. Companies that are highly leveraged finance their operations using debtb. Debt can be more risky because your assets can be repossessed by the bankc. Higher leveragehigher
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