Treasury Stock definitions Flashcards
Treasury Stock definitions
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Treasury Stock Shares previously issued and later repurchased by a company, held as a contra equity account with a debit balance, not entitled to dividends. Contra Equity Account Equity classification that reduces total equity, typically carrying a debit balance, such as the account used for repurchased shares. Debit Balance Accounting state where the left side of an account exceeds the right, characteristic of accounts that reduce equity like repurchased shares. Outstanding Shares Portion of issued shares still held by external investors, eligible for dividends and not repurchased by the company. Issued Shares Total number of shares a company has distributed to investors, including those later repurchased as treasury stock. Cost Method Accounting approach for repurchased shares focusing on the amount paid to reacquire stock, ignoring par value in journal entries. Par Value Nominal value assigned to shares, not relevant when recording repurchased shares under the cost method. Market Price Current trading value of a company's shares, used as the basis for repurchase transactions involving treasury stock. Dividends Distributions of profits to shareholders, not paid on shares held as treasury stock. Additional Paid-In Capital (APIC) Equity account used to record differences between cash received and original cost when reselling repurchased shares. Journal Entry Formal accounting record of a transaction, such as repurchasing or reselling shares, affecting cash, equity, and related accounts. Equity Residual interest in a company's assets after liabilities, reduced by treasury stock transactions and increased when such shares are resold. Cash Asset account affected by treasury stock transactions, decreased when shares are repurchased and increased when resold.
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