Paid-in capital represents the amount of money a company has received from shareholders in exchange for shares of stock, encompassing the funds received from stock issuance, premiums or discounts on stocks sold, stock donations, and the resale of treasury stock.
A payable is an amount that is owed by a company to its suppliers or creditors, typically from the purchase of supplies or inventory (accounts payable), but it can also include amounts owed for other purposes such as bank loans (bank loans payable).
The accounting concept that ensures the financial statements of a company are produced at regular intervals, providing consistency, comparability, and regular communication to stakeholders.
A permanent diminution in value refers to a fall in the value of an asset that is unlikely to be reversed over time. This reduction must be reflected in the balance sheet and necessitates adjustments through the profit and loss account.
Premium on capital stock refers to the excess amount received from stockholders over the par value of the stock issued. It is reflected in the balance sheet under the paid-in-capital section of stockholders' equity and should not be regarded as income.
Prepaid expenses refer to amounts that are paid prior to the period they cover, such as insurance and rent. These expenses are assets on the balance sheet and become tax deductible during the appropriate period.
Pro Forma refers to the presentation of financial data that adheres to a specific format and often includes hypothetical or projected numbers to provide a basis for analysis and planning.
A Professional Valuation is an assessment of the value of an asset by a professionally qualified individual, utilized in a balance sheet or prospectus of a company.
A profit and loss account reserve is a reserve that contains the balance of retained earnings to carry forward. It is fully distributable and shown as part of shareholders' reserves on the balance sheet.
Accounting records that are sufficient to show and explain an organization's transactions, enabling a company to disclose its financial position accurately and comply with statutory regulations.
In the USA, a quarterly report is a financial report issued by a company every three months, containing essential financial statements and a narrative overview of business operations.
The inventory of raw materials held at a specified time, which appears on the balance sheet under the heading of current assets.
A related party is any person or entity that has a significant influence on a reporting entity, as defined in financial reporting standards. This influence does not necessarily equate to control. Proper identification and disclosure of related parties are crucial for financial transparency.
Research and development (R&D) costs involve expenditures towards innovative processes or product developments. Distinguished by Financial Reporting Standards, R&D costs can either be expensed immediately or capitalized to create intangible assets.
Reserve for Depreciation, also known as Accumulated Depreciation, is an accounting term used to describe the total amount of depreciation that has been expensed against an asset's value over time. It reflects the reduction in an asset’s book value due to wear and tear, age, or obsolescence.
A statement that provides a reconciliation of the beginning and ending balances in the retained earnings account on a company's balance sheet.
Shareholders' equity represents the owners' claim after subtracting total liabilities from total assets. It is a crucial metric for understanding a company’s financial health and includes components like share capital and reserves.
Shares authorized refer to the number of shares of stock specified in a company's Articles of Incorporation, which the company is permitted to issue. This figure is displayed in the capital accounts section of a company's balance sheet and typically exceeds the shares issued and outstanding.
Short-term debt, also known as short-term liabilities, refers to debt obligations that are due for payment within one year from the date of the balance sheet. These are recorded under current liabilities, showcasing the financial obligations a company needs to settle in the near term.
A detailed report outlining the resources, liabilities, and capital accounts of a bank or financial institution as well as a summary of the status of assets, liabilities, and equity of a person or business organization.
In accounting, the Statement of Financial Position is an important financial statement that provides a snapshot of a company's financial health at a specific point in time. It is often referred to as a balance sheet and is critical for understanding the assets, liabilities, and equity of a business.
The Statement of Partners' Capital, typically presented on the balance sheet, indicates the net worth of each partner's interest in a business partnership.
A statutory audit is an examination of a company’s financial statements and records, as mandated by regulatory bodies to ensure fairness and accuracy.
Stockholders' equity represents the ownership interest of shareholders in a corporation, calculated as the difference between total assets and total liabilities.
Trade payables represent the amounts a business owes to its suppliers for goods and services received but not yet paid for. They are recorded as current liabilities on the balance sheet.
Translation exposure, also known as accounting exposure, is a type of financial risk that results from the translation of an entity's assets and liabilities from one currency to another.
A trial balance is a bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit columns. This process helps ensure the accuracy of the company’s financial records and is a critical step in the accounting cycle.
Undivided profit refers to the portion of a bank's profits that have neither been paid out as dividends nor transferred to the bank's surplus account, as shown on the balance sheet.
Unearned income or revenue is income received by a business but not yet earned. It is typically classified as a current liability on a company's balance sheet.
Unissued stock refers to shares of a corporation's stock authorized in its charter but not yet issued. These shares are displayed on the balance sheet along with shares that are issued and outstanding. Unissued shares do not pay dividends and cannot be voted. They differ from treasury stock, which is issued but not outstanding as it has been reacquired by the corporation.
The presentation of a financial statement where debits and credits are displayed one above the other.
Working capital is essential for financing the day-to-day operations of a company, calculated as the difference between current assets and current liabilities.
