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273 Cards in this Set
- Front
- Back
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Accounting |
The information system that identifies, records, and communicates the economic events of an organization to interested users. |
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Annual report |
A report prepared by corporate management that presents financial information including financial statements, a management discussion, and analysis section, notes, and an independent auditor's report. |
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Assets |
Resources owned by a business. |
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Auditor's report |
A report prepared by an independent outside auditor stating the auditor's opinion as to the fairness of the presentation of the financial position and results of operations and their conformance with generally accepted accounting principles. |
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Balance sheet |
A financial statement that reports the assets and claims to those assets at a specific point in time. |
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Basic accounting equation |
Assets = Liabilities + Stockholders Equity |
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Certified public accountant (CPA) |
An individual who has met certain criteria and is thus allowed to perform audits of corporations. |
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Common stock |
A term used to describe the total amount paid in by stockholders for the shares they purchase. |
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Corporation |
A business organized as a separate legal entity owned by stockholders. |
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Dividends |
Payments of cash from a corporation to its stockholders. |
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Expenses |
The cost of assets consumed or services used in the process of generating revenues. |
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Income statement |
A financial statement that reports a company's revenues and expenses and resulting net income or net loss for a specific period of time. |
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Liabilities |
Amounts owed to creditors in the form of debts and other obligations. |
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Management discussion and analysis (MD&A) |
A section of the annual report that presents management's views on the company's ability to pay near-term obligations, its ability to fund operations and expansion, and its results of operations. |
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Net income |
The amount by which revenues exceeds expenses. |
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Net loss |
The amount by which expenses exceeds revenues. |
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Notes to the financial statements |
Notes clarify information presented in the financial statements and provide additional detail. |
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Partnership |
A business owned by two or more persons associated as partners. |
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Retained earnings |
The amount of net income retained in the corporation. |
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Retained earnings statement |
A financial statement that summarizes the amounts and causes of changes in retained earnings for a specific time period. |
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Revenue |
The increase in assets or decrease in liabilities resulting from the sale of goods or the performance of services in the normal course of business. |
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Sarbanes-Oxley Act (SOX) |
Regulations passed by Congress to reduce the unethical corporate behavior. |
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Sole proprietorship |
A business owned by one person. |
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Statement of cash flows |
A financial statement that provides financial information about the cash receipts and cash payments of a business for a specific period of time. |
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Stockholders' equity |
The owners' claim to assets. |
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Classified balance sheet |
A balance sheet that groups together similar assets and similar liabilities, using a number of standard classifications and sections. |
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Comparability |
Ability to compare the accounting information of different companies because they use the same accounting principles. |
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Consistency |
Use of the same accounting principles and methods from year to year within a company. |
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Cost constraint |
The constraint that weighs the cost that companies will incur to provide the information against the benefit that financial statement users will gain from having the information available. |
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Current assets |
Assets that companies expect to convert to cash or use up within one year or the operating cycle, whichever is longer. |
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Current liabilities |
Obligations that a company expects to pay within the next year or operating cycle, whichever is longer. |
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Current ratio |
A measure of liquidity computed as current assets divided by current liabilities. |
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Debt to assets ratio |
A measure of solvency calculated as total liabilities divided by total assets. It measures the percentage of total financing provided by creditors. |
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Earnings per share (EPS) |
A measure of the net income earned on each share of common stock; computed as net income minus preferred dividends divided by the average number of common shares outstanding during the year. |
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Economic entity assumption |
An assumption that every economic entity can be separately identified and accounted for. |
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Fair value principle |
Assets and liabilities should be reported at fair value (the price received to sell an asset or settle a liability). |
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Faithful representation |
Information that is complete, neutral, and free from error. |
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Financial Accounting Standards Board (FASB) |
The primary accounting standard-setting body in the United States. |
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Free cash flow |
Net cash provided by operating activities after adjusting for capital expenditures and cash dividends paid. |
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Full disclosure principle |
The accounting principle that dictates that companies disclose circumstances and events that make a difference to financial statement users. |
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Generally accepted accounting principles (GAAP) |
A set of accounting standards that have substantial authoritative support, that guide accounting professionals. |
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Going concern assumption |
The assumption that the company will continue in operation for the foreseeable future. |
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Historical cost principle |
An accounting principle that states that companies should record assets at their cost. |
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Intangible assets |
Assets that do not have physical substance. |
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International Accounting Standards Board (IASB) |
An accounting standard-setting body that issues standards adopted by many countries outside of the United States. |
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International Financial Reporting Standards (IFRS) |
Accounting standards, issued by the IASB, that have been adopted by many countries outside of the United States. |
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Liquidity |
The ability of a company to pay obligations that are expected to become due within the next year or operating cycle. |
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Liquidity ratios |
Measures of the short-term ability of the company to pay its maturing obligations and to meet unexpected needs for cash. |
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Long-term investments |
Generally, (1) investments in stocks and bonds of other corporations that companies hold for more than one year; (2) long-term assets, such as land and buildings, not currently being used in the company's operations; and (3) long-term notes receivable. |
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Materiality |
Whether an item is large enough to likely influence the decision of an investor or creditor. |
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Monetary unit assumption |
An assumption that requires that only those things that can be expressed in money are included in the accounting records. |
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Operating cycle |
The average time required to purchase inventory, sell it on an account, and then collect cash from customers—that is, go from cash to cash. |
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Long-term liabilities (long-term debt) |
Obligations that a company expects to pay after one year. |
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Periodicity assumption |
An assumption that the life of a business can be divided into artificial time periods and that useful reports covering those periods can be prepared for the business. |
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Profitability ratios |
Measures of the operating success of a company for a given period of time. |
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Property, plant, and equipment |
Assets with relatively long useful lives that are currently used in operating the business. |
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Public Company Accounting Oversight Board (PCAOB) |
The group charged with determining auditing standards and reviewing the performance of auditing firms. |
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Ratio |
An expression of the mathematical relationship between one quantity and another |
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Ratio analysis |
A technique that expresses the relationship among selected items of financial statement data |
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Relevance |
The quality of information that indicates the information makes a difference in a decision. |
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Securities and Exchange Commission (SEC) |
The agency of the U.S. government that oversees U.S. financial markets and accounting standard-setting bodies. |
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Solvency |
The ability of a company to pay interest as it comes due and to repay the balance of debt due at its maturity. |
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Solvency ratios |
Measures of the ability of the company to survive over a long period of time. |
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Statement of stockholders' equity |
A financial statement that presents the causes of changes in stockholders' equity during the period, including those that caused retained earnings to change. |
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Timely |
Information that is available to decision-makers before it loses its capacity to influence decisions. |
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Understandability |
Information presented in a clear and concise fashion so that users can interpret it and comprehend its meaning |
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Verifiable |
The quality of information that occurs when independent observers, using the same methods, obtain similar results. |
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Working capital |
The difference between the amounts of current assets and current liabilities. |
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Account |
An individual accounting record of increases and decreases in specific asset, liability, stockholders' equity, revenue or expense items |
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Accounting information system |
The system of collecting and processing transaction data and communicating financial information to decision-makers. |
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Accounting transactions |
Events that require recording in the financial statements because they affect assets, liabilities, or stockholders' equity. |
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Chart of accounts |
A list of a company's accounts |
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Credit |
The right side of an account |
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Debit |
The left side of an account |
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Double-entry system |
A system that records the two-sided effect of each transaction in appropriate accounts. |
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General journal |
The most basic form of journal |
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General ledger |
A ledger that contains all asset, liability, stockholders' equity, revenue, and expense accounts. |
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Journal |
An accounting record in which transactions is initially recorded in chronological order. |
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Journalizing |
The procedure of entering transaction data in the journal. |
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Posting |
The procedure of transferring journal entry amounts to the ledger accounts. |
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T-account |
The basic form of an account |
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Trial balance |
A list of accounts and their balances at a given time. |
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Accrual-basis accounting |
Accounting basis in which companies record, in the periods in which the events occur, transactions that change a company's financial statements, even if cash was not exchanged |
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Accrued expenses |
Expenses incurred but not yet paid in cash or recorded |
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Accrued revenues |
Revenues for services performed but not yet received in cash or recorded. |
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Adjusted trial balance |
A list of accounts and their balances after all adjustments have been made. |
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Adjusting entries |
Entries made at the end of an accounting period to ensure that the revenue recognition and expense recognition principles are followed. |
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Book value |
The difference between the cost of a depreciable asset and its related accumulated depreciation |
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Cash-basis accounting |
Accounting basis in which a company records revenue only when it receives cash and an expense only when it pays cash. |
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Closing entries |
Entries at the end of an accounting period to transfer the balances of temporary accounts to a permanent stockholders' equity account, Retained Earnings |
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Contra asset account |
An account that is offset against an asset account on the balance sheet. |
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Depreciation |
The process of allocating the cost of an asset to expense over its useful life. |
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Earnings management |
The planned timing of revenues, expenses, gains, and losses to smooth out bumps in net income. |
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Expense recognition principle (matching principle) |
The principle that matches expenses with revenues in the period when the company makes efforts to generate those revenues. |
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Fiscal year |
An accounting period that is one year long. |
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Income Summary |
A temporary account used in closing revenue and expense accounts. |
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Periodicity assumption |
An assumption that the economic life of a business can be divided into artificial time periods |
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Permanent accounts |
Balance sheet accounts whose balances are carried forward to the next accounting period |
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Post-closing trial balance |
A list of permanent accounts and their balances after a company has journalized and posted closing entries. |
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Prepaid expenses (prepayments) |
Expenses paid in cash before they are used or consumed. |
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Quality of earnings |
Indicates the level of full and transparent information that a company provides to users of its financial statements. |
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Revenue recognition principle |
The principle that companies recognize revenue in the accounting period in which the performance obligation is satisfied. |
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Reversing entry |
An entry made at the beginning of the next accounting period; the exact opposite of the adjusting entry made in the previous period. |
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Temporary accounts |
Revenue, expense, and dividend accounts whose balances a company transfers to Retained Earnings at the end of an accounting period |
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Unearned revenues |
Cash received and a liability recorded before services are performed. |
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Useful life |
The length of service of a productive asset. |
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Worksheet |
A multiple-column form that companies may use in the adjustment process and in preparing financial statements. |
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Contra revenue account |
An account that is offset against a revenue account on the income statement |
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Cost of goods sold |
The total cost of merchandise sold during the period |
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Gross profit |
The excess of net sales over the cost of goods sold. |
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Net sales |
Sales fewer sales returns and allowances and sales discounts. |
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Periodic inventory system |
An inventory system in which a company does not maintain detailed records of goods on hand throughout the period and determines the cost of goods sold only at the end of an accounting period |
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Perpetual inventory system |
A detailed inventory system in which a company maintains the cost of each inventory item and the records continuously show the inventory that should be on hand. |
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Profit margin |
Measures the percentage of each dollar of sales that results in net income, computed by dividing net income by net sales. |
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Purchase allowance |
the deduction made to the selling price of merchandise, granted by the seller so that the buyer will keep the merchandise. |
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Purchase discount |
A cash discount claimed by a buyer for prompt payment of a balance due |
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Purchase invoice |
A document that provides support for each purchase. |
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Purchase return |
A return of goods from the buyer to the seller for cash or credit |
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Quality of earnings ratio |
A measure used to indicate the extent to which a company's earnings provide a full and transparent depiction of its performance; computed as net cash provided by operating activities divided by net income. |
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Sales discount |
A reduction is given by a seller for prompt payment of a credit sale. |
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Sales invoice |
A document that provides support for each sale. |
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Sales returns and allowances |
Transactions in which the seller either accepts goods back from the purchaser (a return) or grants a reduction in the purchase price (an allowance) so that the buyer will keep the goods. |
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Sales revenue |
Primary source of revenue for a merchandising company |
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Average cost method |
An inventory costing method that uses the weighted-average unit cost to allocate the cost of goods available for sale to ending inventory and cost of goods sold. |
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Consigned goods |
Goods held for sale by one party although ownership of the goods is retained by another party. |
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Current replacement cost |
The cost of purchasing the same goods at the present time from the usual suppliers in the usual quantities. |
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Days in inventory |
Measure of the average number of days inventory is held; calculated as 365 divided by inventory turnover |
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Finished goods inventory |
Manufactured items that are completed and ready for sale |
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First-in, first-out (FIFO) method |
An inventory costing method that assumes that the earliest goods purchased are the first to be sold. |
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FOB destination |
Freight terms indicating that ownership of goods remains with the seller until the goods reach the buyer. |
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FOB shipping point |
Freight terms indicating that ownership of goods passes to the buyer when the public carrier accepts the goods from the seller. |
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Inventory turnover |
A ratio that indicates the liquidity of inventory by measuring the number of times average inventory sold during the period; computed by dividing the cost of goods sold by the average inventory during the period. |
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Just-in-time (JIT) inventory |
The inventory system in which companies manufacture or purchase goods just in time for use. |
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Last-in, first-out (LIFO) method |
An inventory costing method that assumes that the latest units purchased are the first to be sold. |
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LIFO reserve |
For a company using LIFO, the difference between inventory reported using LIFO and inventory using FIFO. |
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Lower-of-cost-or-market (LCM) |
A basis whereby inventory is stated at the lower of either its cost or its market value as determined by current replacement cost |
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Raw materials |
Basic goods that will be used in production but have not yet been placed in production |
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Specific identification method |
An actual physical flow costing method in which particular items sold and items still in inventory are specifically posted to arrive at cost of goods sold and ending inventory. |
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Weighted-average unit cost |
Average cost that is weighted by the number of units purchased at each unit cost |
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Work in process |
That portion of manufactured inventory that has begun the production process but is not yet complete. |
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Bank reconciliation |
The process of comparing the bank's account balance with the company's balance, and explaining the differences to make them agree |
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Bank statement |
A statement received monthly from the bank that shows the depositor's bank transactions and balances. |
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Bonding |
Obtaining insurance protection against theft by employees |
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Cash |
Resources that consist of coins, currency, checks, money orders, and money on hand or on deposit in a bank or similar depository. |
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Cash budget |
A projection of anticipated cash flows, usually over a one- to two-year period |
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Cash equivalents |
Short-term, highly liquid investments that can be readily converted to a specific amount of cash and which are relatively insensitive to interest rate changes. |
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Deposits in transit |
Deposits in transit |
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Electronic funds transfer (EFT) |
A disbursement system that uses wire, telephone, or computer to transfer cash from one location to another. |
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Fraud |
A dishonest act by an employee that results in a personal benefit to the employee at a cost to the employer. |
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Fraud triangle |
The three factors that contribute to fraudulent activity by employees: opportunity, financial pressure, and rationalization |
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Internal auditors |
Company employees who continuously evaluate the effectiveness of the company's internal control systems. |
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Internal control |
All the related methods and measures adopted within an organization to safeguard assets and enhance the reliability of accounting records, increase the efficiency of operations, and ensure compliance with laws and regulations. |
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NSF check |
A check that is not paid by a bank because of insufficient funds in a bank account. |
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Outstanding checks |
Checks issued and recorded by a company that has not been paid by the bank |
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Petty cash fund |
A cash fund used to pay relatively small amounts |
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Restricted cash |
Cash that is not available for general use but instead is restricted for a particular purpose |
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Sarbanes-Oxley Act (SOX) |
Law that requires publicly traded companies to maintain adequate systems of internal control |
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Treasurer |
The employee responsible for the management of a company's cash. |
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Voucher |
An authorization form prepared for each expenditure in a voucher system. |
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Voucher system |
A network of approvals by authorized individuals, acting independently, to ensure that all disbursements by check are proper. |
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Accounts receivable |
Amounts customers owe on an account. |
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Accounts receivable turnover |
A measure of the liquidity of accounts receivable, computed by dividing net credit sales by average net accounts receivable. |
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Aging the accounts receivable |
A schedule of customer balances classified by the length of time they have been unpaid. |
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Allowance method |
A method of accounting for bad debts that involve estimating uncollectible accounts at the end of each period. |
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Average collection period |
The average amount of time that a receivable is outstanding, calculated by dividing 365 days by the accounts receivable turnover. |
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Bad Debt Expense |
An expense account to record losses from extending credit. |
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Cash (net) realizable value |
The net amount a company expects to receive in cash from receivables. |
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Concentration of credit risk |
The threat of nonpayment from a single large customer or class of customers that could adversely affect the financial health of the company. |
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Direct write-off method |
A method of accounting for bad debts that involve charging receivable balances to Bad Debt Expense at the time receivables from a particular company are determined to be uncollectible |
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Dishonored (defaulted) note |
A note that is not paid in full at maturity. |
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Factor |
A finance company or bank that buys receivables from businesses for a fee and then collects the payments directly from the customers. |
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Maker |
The party in a promissory note who is making the promise to pay. |
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Notes receivable |
Written promise (as evidenced by a formal instrument) for amounts to be received. |
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Payee |
The party to whom payment of a promissory note is to be made. |
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Percentage-of-receivables basis |
A method of estimating the amount of bad debt expense whereby management establishes a percentage relationship between the amount of receivables and the expected losses from uncollectible accounts. |
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Promissory note |
A written promise to pay a specified amount of money on demand or at a definite time. |
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Receivables |
Amounts due from individuals and companies that are expected to be collected in cash. |
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Trade receivables |
Notes and accounts receivable that result from sales transactions. |
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Accelerated-depreciation method |
A depreciation method that produces higher depreciation expense in the early years than the straight-line approach. |
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Additions and improvements |
Costs incurred to increase the operating efficiency, productive capacity, or expected useful life of a plant asset. |
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Amortization |
The process of allocating to expense the cost of an intangible asset. |
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Asset turnover |
Indicates how efficiently a company uses its assets to generate sales; calculated as net sales divided by average total assets. |
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Capital expenditures |
Expenditures that increase the company's investment in plant assets. |
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Capital lease |
A contractual agreement allowing one party (the lessee) to use another party's asset (the lessor); accounted for like a debt-financed purchase by the lessee |
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Cash equivalent price |
An amount equal to the fair value of the asset given up or the fair value of the asset received, whichever is more clearly determinable. |
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Copyright |
An exclusive right granted by the federal government allowing the owner to reproduce and sell an artistic or published work. |
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Declining-balance method |
A depreciation method that applies a constant rate to the declining book value of the asset and produces a decreasing annual depreciation expense over the asset's useful life. |
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Depreciable cost |
The cost of a plant asset less its salvage value. |
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Depreciation |
The process of allocating to expense the cost of a plant asset over its useful life in a rational and systematic manner. |
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Franchise |
A contractual arrangement under which the franchisor grants the franchisee the right to sell certain products, to perform specific services, or to use certain trademarks or trade names, usually within a designated geographic area. |
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Goodwill |
The value of all favorable attributes that relate to a company that are not attributable to any other specific asset. |
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Impairment |
A permanent decline in the fair value of an asset. |
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Intangible assets |
Rights, privileges, and competitive advantages that result from the ownership of long-lived assets that do not possess physical substance. |
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Lessee |
A party that has made contractual arrangements to use another party's asset for a period at an agreed price. |
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Lessor |
A party that has agreed contractually to let another party use its asset for a period at an agreed price. |
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Operating lease |
A contractual agreement allowing one party (the lessee) to use the asset of another party (the lessor); accounted for as a rental by the lessee. |
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Ordinary repairs |
Expenditures to maintain the operating efficiency and expected productive life of the asset. |
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Patent |
An exclusive right issued by the U.S. Patent Office that enables the recipient to manufacture, sell, or otherwise control an invention for a period of 20 years from the date of the grant. |
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Plant assets |
Resources that have physical substance, are used in the operations of the business, and are not intended for sale to customers. |
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Research and development costs |
Expenditures that may lead to patents, copyrights, new processes, and new products; must be expensed as incurred. |
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Return on assets |
A profitability measure that indicates the amount of net income generated by each dollar of assets; computed as net income divided by average assets. |
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Revenue expenditures |
Expenditures that are immediately charged against revenues as an expense. |
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Straight-line method |
A method in which companies expense an equal amount of depreciation for each year of the asset's useful life. |
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Trademark (trade name) |
A word, phrase, jingle, or symbol that distinguishes or identifies a particular enterprise or product. |
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Units-of-activity method |
A depreciation method in which useful life is expressed in terms of the total units of production or use expected from the asset. |
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Bond certificate |
A legal document that indicates the name of the issuer, the face value of the bonds, and other data such as the contractual interest rate and the maturity date of the bonds |
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Bonds |
A form of interest-bearing notes payable issued by corporations, universities, and governmental entities |
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Callable bonds |
Bonds that the issuing company can redeem (buy back) at a stated dollar amount prior to maturity |
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Capital leases |
A contractual agreement allowing one party (the lessee) to use the assets of another party (the lessor); accounted for like a debt-financed purchase by the lessee |
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Contingencies |
Events with uncertain outcomes that may represent potential liabilities. |
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Contractual (stated) interest rate |
Rate used to determine the amount of interest the borrower pays and the investor receives. |
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Convertible bonds |
Bonds that can be converted into common stock at the bondholder's option. |
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Current liability |
A debt that a company reasonably expects to pay (1) from existing current assets or through the creation of other current liabilities, and (2) within one year or the operating cycle, whichever is longer. |
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Discount |
(on a bond) The difference between the face value of a bond and its selling price when a bond is sold for less than its face value. |
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Effective-interest method of amortization |
A method of amortizing bond discount or bond premium that results in periodic interest expense equal to a constant percentage of the carrying value of the bondsA method of amortizing bond discount or bond premium that results in periodic interest expense equal to a constant percentage of the carrying value of the bonds |
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Effective-interest rate |
Rate established when bonds are issued that maintains a constant value for interest expense as a percentage of bond carrying value in each interest period. |
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Face value |
Amount of principal due at the maturity date of the bond |
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Long-term liabilities |
Obligations that a company expects to pay more than one year in the future. |
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Market interest rate |
The rate investors demand for loaning funds to the corporation. |
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Maturity date |
The date on which the final payment on a bond is due from the bond issuer to the investor. |
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Mortgage note payable |
A long-term note secured by a mortgage that pledges title to specific assets as security for the loan. |
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Notes payable |
An obligation in the form of a written note. |
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Off-balance-sheet financing |
The intentional effort by a company to structure its financing arrangements so as to avoid showing liabilities on its balance sheet. |
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Operating lease |
A contractual agreement allowing one party (the lessee) to use the asset of another party (the lessor); accounted for as a rental |
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Premium |
on a bond) The difference between the selling price and the face value of a bond when a bond is sold for more than its face value. |
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Present value |
The value today of an amount to be received at some date in the future after taking into account current interest rates. |
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Secured bonds |
Bonds that have specific assets of the issuer pledged as collateral. |
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Straight-line method of amortization |
A method of amortizing bond discount or bond premium that allocates the same amount to interest expense in each interest period. |
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Times interest earned |
A measure of a company's solvency, calculated by dividing income before interest expense and taxes by interest expense. |
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Time value of money |
The relationship between time and money. A dollar received today is worth more than a dollar promised at some time in the future. |
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Unsecured bonds |
Bonds issued against the general credit of the borrower. |
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Available-for-sale securities |
Securities that are held with the intent of selling them sometime in the future |
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Consolidated financial statements |
Financial statements that present the assets and liabilities controlled by the parent company and the total revenues and expenses of the subsidiary companies. |
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Controlling interest |
Ownership of more than 50% of the common stock of another entity. |
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Cost method |
An accounting method in which the investment in common stock is recorded at cost and revenue is recognized only when cash dividends are received. |
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Debt investments |
Investments in government and corporation bonds. |
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Equity method |
An accounting method in which the investment in common stock is initially recorded at cost and the investment account is then adjusted annually to show the investor's equity in the investee. |
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Fair value |
Amount for which a security could be sold in a normal market. |
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Held-to-maturity securities |
Debt securities that the investor has the intent and ability to hold to maturity. |
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Long-term investments |
Investments that are not readily marketable or that management does not intend to convert into cash within the next year or operating cycle, whichever is longer. |
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Mark-to-market |
A method of accounting for certain investments that require that they are adjusted to their fair value at the end of each period. |
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Parent company |
A company that owns more than 50% of the common stock of another entity. |
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Short-term investments (marketable securities) |
Investments that are readily marketable and intended to be converted into cash within the next year or operating cycle, whichever is longer. |
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Stock investments |
Investments in the capital stock of corporations. |
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Subsidiary (affiliated) company |
A company in which more than 50% of its stock is owned by another company. |
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Trading securities |
Securities bought and held primarily for sale in the near term to generate income on short-term price differences. |
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Authorized stock |
The amount of stock that a corporation is authorized to sell as indicated in its charter. |
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Cash dividend |
A pro rata (proportional to ownership) distribution of cash to stockholders. |
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Charter |
A document that describes a corporation's name and purpose, types of stock and number of shares authorized, names of individuals involved in the formation, and number of shares each individual has agreed to purchase. |
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Corporation |
A company organized as a separate legal entity, with most of the rights and privileges of a person. |
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Cumulative dividend |
A feature of preferred stock entitling the stockholder to receive current and unpaid prior-year dividends before common stockholders receive any dividends |
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Declaration date |
The date the board of directors formally authorizes the dividend and announces it to stockholders. |
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Deficit |
A debit balance in Retained Earnings. |
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Dividend |
A distribution by a corporation to its stockholders on a pro rata (proportional to ownership) basis. |
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Dividends in arrears |
Preferred dividends that were supposed to be declared but were not declared during a given period. |
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Legal capital |
The amount of capital that must be retained in the business for the protection of corporate creditors. |
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No-par value stock |
A capital stock that has not been assigned a value in the corporate charter. |
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Outstanding stock |
Capital stock that has been issued and is being held by stockholders |
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Paid-in capital |
The amount stockholders paid into the corporation in exchange for shares of ownership. |
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Par value stock |
A capital stock that has been assigned a value per share in the corporate charter. |
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Payment date |
The date cash dividend payments are made to stockholders. |
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Payout ratio |
A measure of the percentage of earnings a company distributes in the form of cash dividends to common stockholders |
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Preferred stock |
A capital stock that has contractual preferences over common stock in certain areas. |
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Privately held corporation |
A corporation that has only a few stockholders and whose stock is not available for sale to the general public. |
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Publicly held corporation |
A corporation that may have thousands of stockholders and whose stock is traded on a national securities market. |
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Record date |
The date when the company determines ownership of outstanding shares for dividend purposes. |
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Retained earnings |
Net income that a company retains in the business. |
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Retained earnings restrictions |
Circumstances that make a portion of retained earnings currently unavailable for dividends. |
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Return on common stockholders' equity (ROE) |
A measure of profitability from the stockholders' point of view; computed by dividing net income minus preferred dividends by average common stockholders' equity. |
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Stated value |
The amount per share assigned by the board of directors to no-par stock. |
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Stock dividend |
A pro rata (proportional to ownership) distribution of the corporation's own stock to stockholders. |
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Stock split |
The issuance of additional shares of stock to stockholders accompanied by a reduction in the par or stated value per share. |
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Treasury stock |
A corporation's own stock that has been reacquired by the corporation and is being held for future use. |
