Question

At September 30, the end of Beijing Company's third quarter, which of the following stockholders' equity accounts are reported?

1) Common Stock
2) Retained Earnings
3) Treasury Stock
4) Preferred Stock

Answer 1

Stockholders' equity accounts reported at the end of Beijing Company's third quarter include Common Stock, Retained Earnings, Treasury Stock, and Preferred Stock. Shareholders influence company management through voting, while the board of directors makes vital decisions. The sale of stock offers potential returns but no fixed rate, unlike debt instruments.

Step-by-step explanation:

When a company produces a financial report, particularly at the end of a fiscal quarter, it commonly includes key stockholders' equity accounts. For the Beijing Company at the end of its third quarter on September 30, the following accounts are typically reported:

• Common Stock - This represents the equity held by the common shareholders and reflects the ownership of the company.
• Retained Earnings - This account displays the cumulative earnings of the company that have not been distributed to shareholders as dividends but instead are reinvested in the business or kept as a reserve for future use.
• Treasury Stock - When a company buys back its own shares, these repurchased shares are recorded in the treasury stock account and are considered issued but not outstanding.
• Preferred Stock - If applicable, this account represents the equity held by preferred shareholders, who often have different rights and privileges compared to common shareholders, including preference in receiving dividends and assets upon liquidation.

To address related concerns, shareholders in a public company typically influence decisions about the company management through their voting rights at the company's annual general meeting (AGM) where they elect the board of directors. The board then makes critical decisions about the company's strategies, including the issuance of stock, dividend payments, and reinvestment of profits. When a company decides to raise funds through the sale of stock, it doesn't promise a specific rate of return but instead offers potential capital gains and dividends. This is in contrast to debt financing, where a fixed interest is promised. Lastly, financial intermediaries like banks play a pivotal role in the financial system by facilitating transactions and moving funds from savers to borrowers, earning them this title.