MUHASEBE II

Retained earnings represents the amount earned through profitable operations of a corporation and that is kept in the corporation. In other words, it is the earned amount which is not distributed to the shareholders as dividends.

The distributions from the earnings to the shareholders is named as dividends.

Retained earnings account’s credit balance indicates that the corporation’s lifetime earnings exceed lifetime losses and dividends

Retained earnings account’s credit balance indicates that the corporation’s lifetime earnings exceed lifetime losses and dividends.

1.000.000 - 200.000 - 700.000 = 100.000

If a corporation wants to pay cash dividends, three conditions required are as follows:

1. Sufficient retained earnings
2. Adequate cash
3. Declared dividends by the board of directors

The preferred dividend = Outstanding preferred shares x Par value x Preferred dividend rate

50,000 x 30 x 10% = 150,000 TL

A cumulative preferred share is a preferred share that can also receive all dividends in arrears while receiving a new preferred dividend.

Share dividend is a distribution of a corporation’s own shares to the shareholders as dividends.

To record the declaration of a small share dividend with its market value, the Retained Earnings account should be debited for market value. A shareholders’ equity account named Common Share Dividend Distributable is credited with the par or stated value and Paid-in Capital in Excess of Par is credited with the remaining amount.

Comprehensive income components are as follows:

• Unrealized gains or losses
• Foreign-currency translation adjustments
• Gains (losses) from post-retirement benefit plans
• Deferred gains (losses) derivatives.

The first source of shareholders’ equity part is Paid-in Capital which was discussed in the previous chapter. The second one is Retained Earnings that represents the amount earned through profitable operations of a corporation that keeps in the corporation.

Retained earnings represents the amount of the assets that generated through profitable operations of corporations and not distributed to the shareholders in the form of dividend. It means corporations retain some part of their net income in the corporation is internally generated equity because it results from corporate decisions to retain net income to be used in future operations or for expansion.

If a corporation wants to pay cash dividends, three conditions are as follows:

A share split is increasing the number of issued and
outstanding shares of a corporation that results in decreasing
of shares’ par value.

After the decision of paying dividends, three dates are important for a corporation. These are
Declaration date, the Record date, and Payment date.

One of the ratios that is used for analysis is the Return on Equity (ROE). It measures a corporation’s
profitability by presenting how much profit it generates with each item (TL) of shareholders’ equity

Share dividend is a distribution of a corporation’s own shares to the shareholders as dividends.

on the declaration date a liability
occurs for a corporation, thus, a journal entry is
required at that time.

Share dividend is a distribution of a corporation’s
own shares to the shareholders as dividends.

A share split is increasing the number of issued and
outstanding shares of a corporation that results in decreasing
of shares’ par value.