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Cards In This Set
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Corporation
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Influenced by state corporate laws, use of capital stock or share system, development of a variety of ownership interests
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Preferred and common
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Types of shares
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Common
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May have more than one class type
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Contra account
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Treasury stock
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Earned capital (retained earnings) and contributed capital
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Equity is made up of
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Direct costs of issuing stock
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Legal and accounting fees, underwriting cost, printing cost, and taxes
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Debit PIC (deduct from APIC)
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Direct costs
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Indirect cost
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Management salaries
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Expense as incurred
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Indirect costs
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Treasury stock
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Issued but not outstanding
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Treasury stock
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Stock purchased back by the corporation/issuer.
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Increase EPS and return on equity, tax efficient distributinos of excess cash to SH, provide stock compensation, thwart takeovers, create or improve the market for the stock
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Reasons to why corporations buy back their outstanding stock
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Signaling theory
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Corporation buys back outstanding stock to create or improve the market for the stock
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Debit treasury stock for cost
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Purchase of treasury stock
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Credit TS at cost
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Reissue of treasury stock
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