ACCT-2010 Lecture Notes - Lecture 11: Treasury Stock, Dividend, National Beverage
20 Oct 2017
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Common stock: the basic voting stock issued by a corporation to stockholders. Benefits of common stock: voting rights, dividends, residual claim, preemptive rights. Equity financing- obtaining large amount of long-term financing by issuing new stock. Advantages: equity does not have to be repaid, debt does, dividends are optional. Debt financing- obtaining large amount of long-term financing by borrowing from lenders. Interest on debt is tax deductible: de(cid:271)t does(cid:374)"t (cid:272)ha(cid:374)ge sto(cid:272)kholde(cid:396) (cid:272)o(cid:374)t(cid:396)ol. **all transactions between a company and its stockholders affect the (cid:272)o(cid:373)pa(cid:374)(cid:455)"s (cid:271)ala(cid:374)(cid:272)e sheet a(cid:272)(cid:272)ou(cid:374)ts only. Authorized shares- the max # of shares of capital stock that can be issued, as specified in the charter. Issued shares- shares of stock that have been distributed by the corporation. Treasury stock- issued shares that have been reacquired by the company. Outstanding shares- shares that are currently held by stockholders (not the corporation itself) Before stock can be issued, its specific rights and characteristics must be authorized and defined in the corporate charter.
