The Common Stock Account Is Increased by a Debit

question 213

True/False

The Common Stock account is increased by a debit.

Differentiate between various types of stock (common, preferred, treasury) and their specific characteristics, including how dividends are distributed.

Appreciate how the market value of stock affects corporate actions such as stock dividends and splits.

Recognize the purposes and effects of stock splits and stock dividends on par value, market value, and shareholders' equity.

Know how treasury stock transactions are recorded and their impact on financial statements.

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Definitions:

Bank Runs

A situation where a large number of a bank's depositors try to withdraw their funds simultaneously over concerns about the bank's solvency.

Reserve Banking

A banking system in which banks hold a fraction of their deposits in reserve, while lending out the remainder to generate profits.

Federal Funds Rate

The interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight, on an uncollateralized basis.

Reserve Requirement

A regulatory mandate on banks to hold a certain percentage of their deposits in reserve either in their vaults or at the central bank.