Issues of Shares: Terminologies Used - SS2 Accounting Lesson Note
Shares refer to units of ownership in a company. When a company issues shares, it is essentially dividing ownership of the company among multiple individuals or entities. Some common terminologies used in issues of shares include:
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Shareholder: A shareholder is an individual or entity that owns shares in a company.
Share capital: Share capital is the total value of the shares issued by a company.
Issued shares: Issued shares are the total number of shares that a company has issued to shareholders.
Authorized shares: Authorized shares refer to the maximum number of shares that a company can issue to shareholders. This number is typically specified in the company's articles of incorporation.
Par value: Par value is the face value of a share, which is often set at a nominal amount, such as ₦200 per share.
Market value: Market value is the current value of a share based on the stock market's supply and demand.
Dividend: A dividend is a payment made by a company to its shareholders, typically as a share of the company's profits.
Rights issue: A rights issue is an offering of additional shares to existing shareholders, usually at a discounted price.
IPO: An IPO, or initial public offering, is the first time that a company offers shares of its stock to the public.
Stock split: A stock split is a process in which a company divides its existing shares into multiple shares, typically to make them more affordable for investors.