Chapter 12 explains the characteristics of a corporation and also introduces many of the terms related to stock: common, preferred, par value, stated value, no-par, cumulative, and noncumulative. Additional topics covered in Chapter 12 are treasury stock (cost method), stock splits, dividends, and computation and significance of earnings per share.

Let's start our discussion by responding to one of the following questions. (Response must be a minimum of 150 words)

What are the three classifications of restrictions of retained earnings, and how are such restrictions normally reported on the financial statements?

Indicate how prior period adjustments would be reported on the financial statements presented only for the current period.

What is the primary purpose of a stock split?

150 words