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Somebody please correct me if I am wrong, but issuing capital stock increases total assets. If one considers total assets when calculating net income, any capital stock or additional paid in capital must be deducted from total assets in order to find net income.
Issuance of stock does not contribute to income from operations; it is a financing activity that contributes to total equity. Also, if there are dividend payments for the year, these outflows must be added to assets before arriving at net income.
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Whats is the Journal entery for costs of issuing stock?
Debit Capital stock xx Credit Cash xx Generally you would offset costs of issuing common or preferred stock against the similar equity account.
What effect will the declaration and distribution of a stock dividend have on the net income and cash flows?
19. What effect will the declaration and distribution of a stock dividend have on net income and cash flows? (Points : 2)No effect on net income or cash flowsNo effect on net income, decrease cash flowsDecrease net income, decrease cash flowsIncrease net income, no effect on cash flows
What is the effect of issuance of stock dividend to paid in capital?
Stock dividend changes the number of shares outstanding but it does not have any affect on amount of capital
Journal entry for Issuing Par Value Common Stock to another company?
[Debit] Cash / bank [Credit] share capital
What effect does the purchase of treasury stock have on net income?
Purchase of treasury stock has no effect on the net income of a business. The purchase may affect cash flow of the business. No profit or loss is claimed when shares are re-issued at above or below cost.
What is the advantage of issuing stock?
It allows the corporation to raise capital.
What is the porpose of a company issuing stock?
Main purpose for issuing more stock is to get more cash to run the business and to invest in good opportunities or to fulfil the working capital requirements.
Whats is the Journal entery for costs of issuing stock?
Debit Capital stock xx Credit Cash xx Generally you would offset costs of issuing common or preferred stock against the similar equity account.
What are advantages of preferred stock?
One reason is raise capital for a company without sacrificing the control of company. Issuing common stock would do this.
What effect will the declaration and distribution of a stock dividend have on the net income and cash flows?
19. What effect will the declaration and distribution of a stock dividend have on net income and cash flows? (Points : 2)No effect on net income or cash flowsNo effect on net income, decrease cash flowsDecrease net income, decrease cash flowsIncrease net income, no effect on cash flows
Why preferred stock is issued by company?
One reason is raise capital for a company without sacrificing the control of company. Issuing common stock would do this.
Why is issuing stock a popular method used to raise capital?
investors cannot earn money, the company does not have to repay capital, paying dividends is not an option
Is a firms cost of capital influenced by net income capital structure or par value of common stock?
Capital structure
Why do companies issue stock?
Businesses issue stock to raise capital Advantages of issuing stock: - A Company can raise more capital than it could borrow. - A Company does not have to make periodic interest payments to creditors. - A Company does not have to make principal payments. Disadvantages of Issuing Stock: - The principal owners have to share their ownership with other shareholders. - Shareholders have a voice in policies that affect the company operations. Source Qwoter.com
An example of growth factor in common stock is issuing new stock to provide capital for future growth?
An example of the growth factor in common stock is retaining profits in order to reinvest into the firm
Can dividend checks be reinvest it in the stock and not pay capital gains tax on it as income?
No.
What is the effect of issuance of stock dividend to paid in capital?
Stock dividend changes the number of shares outstanding but it does not have any affect on amount of capital
