微观经济学dividends,retainedearningsandincomereporting(编辑修改稿)

微观经济学dividends,retainedearningsandincomereporting(编辑修改稿)内容摘要：

effect the total equity of the pany • The purpose of a share split is to increase the marketability of the shares by lowering the market price per share • A share split does not affect the balance in shareholders’ equity accounts and therefore a journal entry is not required PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 17 Share splits continued • Differences between effects of share splits and share dividends PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 18 Item Share Split Share Dividend Total share capital No change Increase Total retained earnings No change Decrease Value per share Decrease No change Dividend reinvestment plans • Many panies offer dividend reinvestment plans (DRP) to their shareholders • Shareholders can reinvest all or part of their cash dividend by purchasing additional shares usually at a discount price • A DRP has the same effect as a share dividend PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 19 RETAINED EARNINGS • Retained earnings is profit that is retained in the pany • The balance in retained earnings is part of the shareholders’ claim on the total assets of the pany • It does not represent a claim against any specific asset PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 20 LO2 RETAINED EARNINGS continued • A loss for a period is recorded in Retained Earnings by a closing entry in which Retained Earnings is debited and Profit and Loss Summary is credited • Shareholders’ equity with deficit: PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 21 Statement of Financial Position (partial) Shareholders’ equity Share capital $800 000 Retained earnings (deficit) (50 000) Total shareholders’ equity $750 000 Retained earnings restrictions • Retained earnings restrictions make a portion of the balance currently unavailable for dividends • Restrictions have two causes: 1. Contractual –Long term debt contracts may restrict retained earnings as condition for loan 2. Voluntary –Board of Directors may voluntarily restrict retained earnings for specific purposes such as future plant expansion PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 22 Retained earnings restrictions continued Disclosure • Retained earnings restrictions are disclosed in the notes to the financial statements • The balance in retained earnings is generally available for dividend declarations – some panies state this fact PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 23 Priorperiod adjustments • Correction of a material error in reporting ine in a previously issued financial statement is made retrospectively in the first financial statement after discover • The correction is –made directly to Retained Earnings –reported in the current year’s retained earnings statement as an adjustment of the beginning balance of Retained Earnings PowerPoint presentation by Dr Anne Abraham, University of Western Sydney 24 Priorperiod adjustments c。