WGU Stockholders Equity - Dilutive securities
and compensation plans Exam | Questions and
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Terms in this set (170)
Convertible Bonds/Debt Convertible bonds are financial instruments that
enable the bondholder to convert the bonds into a
specified number of shares of common stock.
When the bondholder elects to convert bonds into
common stock, the company derecognizes the
debt, removes the bond payable and unamortized
discount or premium accounts. The number of
common shares received on conversion is based
on some exchange ratio.
· Articles of Incorporation - the corporate form of business organization begins
with the submitting of articles of incorporation to
the state in which incorporation is desired. The
corporate charter includes the names of the
individual incorporators; the corporate name,
corporate address, and nature of business; the
types, par value, and number of shares of capital
stock to be authorized; composition of the initial
board of directors; and any other information
required by state law.
,· Preemptive stock rights - preemptive stock rights protect existing common
shareholders from involuntary dilution of their
ownership share in the event the corporation issues
new shares. A privilege often referred to as a
warrant. Common shareholders are offered first the
right to share in new issues of common stock.
Common shareholders share proportionately in the
new stock issuance of the same class they own.
· Residual interest – is the interest that remains after all liabilities and
preferred shareholders are paid off. The residual
stakeholders are usually the common stockholders
and they, bear the ultimate risks and uncertainties
and receive the benefits of ownership.
Dividends: A dividend is a distribution of a company's retained
Stockholders/shareholders receive a earnings to stockholders/shareholders. Preferred
proportionate part of any dividend stockholders/shareholders have preferential rights
that is declared and paid. over common stockholders/shareholders to
dividends.
Liquidation: Preferred stockholders/shareholders have
Stockholders/shareholders receive preferential rights over common
their proportion share of any assets stockholders/shareholders to liquidation.
remaining after the company pays its
debts and liquidates (goes out of
business).
Preferred stock is called preferred dividends and distribution of assets if the
because it usually has two corporation is dissolved.
preferences over common stock.
These preferences relate to
, Maintaining their proportionate share preemption
in the ownership of a corporation
when new stock is available to be
purchased is an example of which
stockholder right
What must a company submit to articles of incorporation.
establish it as a legal entity that is
subject to state law?
What are two descriptions of a. a privilege often referred to as a warrant.
preemptive stock rights? b. a means of protecting stockholders from
involuntary dilution of ownership
What is a stockholder/shareholder . preferential payment of dividends.
benefit of preferred stock?
. What is a difference between common stock shares in rights equally in the
common stock and preferred stock? absence of restrictive provisions, and preferred
stock sacrifices some rights to gain other rights.
How are company assets disbursed common shareholder disbursements occur after
to shareholders of common stock preferred shareholder disbursements.
and preferred stock in the event of
liquidation?
A share of stock has a preemptive involuntary dilution of ownership interest.
right. From which event is the
stockholder protected
Common stockholders are said to be can negotiate individual contracts on behalf of the
the residual owners. The term enterprise
residual owner means that
shareholders
and compensation plans Exam | Questions and
Answers | Verified Solutions | 2026 Edition | Pass
Guaranteed
Save
Terms in this set (170)
Convertible Bonds/Debt Convertible bonds are financial instruments that
enable the bondholder to convert the bonds into a
specified number of shares of common stock.
When the bondholder elects to convert bonds into
common stock, the company derecognizes the
debt, removes the bond payable and unamortized
discount or premium accounts. The number of
common shares received on conversion is based
on some exchange ratio.
· Articles of Incorporation - the corporate form of business organization begins
with the submitting of articles of incorporation to
the state in which incorporation is desired. The
corporate charter includes the names of the
individual incorporators; the corporate name,
corporate address, and nature of business; the
types, par value, and number of shares of capital
stock to be authorized; composition of the initial
board of directors; and any other information
required by state law.
,· Preemptive stock rights - preemptive stock rights protect existing common
shareholders from involuntary dilution of their
ownership share in the event the corporation issues
new shares. A privilege often referred to as a
warrant. Common shareholders are offered first the
right to share in new issues of common stock.
Common shareholders share proportionately in the
new stock issuance of the same class they own.
· Residual interest – is the interest that remains after all liabilities and
preferred shareholders are paid off. The residual
stakeholders are usually the common stockholders
and they, bear the ultimate risks and uncertainties
and receive the benefits of ownership.
Dividends: A dividend is a distribution of a company's retained
Stockholders/shareholders receive a earnings to stockholders/shareholders. Preferred
proportionate part of any dividend stockholders/shareholders have preferential rights
that is declared and paid. over common stockholders/shareholders to
dividends.
Liquidation: Preferred stockholders/shareholders have
Stockholders/shareholders receive preferential rights over common
their proportion share of any assets stockholders/shareholders to liquidation.
remaining after the company pays its
debts and liquidates (goes out of
business).
Preferred stock is called preferred dividends and distribution of assets if the
because it usually has two corporation is dissolved.
preferences over common stock.
These preferences relate to
, Maintaining their proportionate share preemption
in the ownership of a corporation
when new stock is available to be
purchased is an example of which
stockholder right
What must a company submit to articles of incorporation.
establish it as a legal entity that is
subject to state law?
What are two descriptions of a. a privilege often referred to as a warrant.
preemptive stock rights? b. a means of protecting stockholders from
involuntary dilution of ownership
What is a stockholder/shareholder . preferential payment of dividends.
benefit of preferred stock?
. What is a difference between common stock shares in rights equally in the
common stock and preferred stock? absence of restrictive provisions, and preferred
stock sacrifices some rights to gain other rights.
How are company assets disbursed common shareholder disbursements occur after
to shareholders of common stock preferred shareholder disbursements.
and preferred stock in the event of
liquidation?
A share of stock has a preemptive involuntary dilution of ownership interest.
right. From which event is the
stockholder protected
Common stockholders are said to be can negotiate individual contracts on behalf of the
the residual owners. The term enterprise
residual owner means that
shareholders
