Liabilities and Stockholders' Equity

A collection of flashcards covering key vocabulary terms and definitions related to liabilities and stockholders' equity.

Debt Financing

Includes all liabilities owed by a business, such as notes payable and bonds payable.

Equity Financing

Investments from owners of the business, represented through stock issued to indicate ownership interest.

Current Liabilities

Debts due within a short time, usually 1 year.

Long-term Liabilities

Debts that are due beyond one year.

Contingent Liabilities

Potential liabilities that depend on the outcome of future events.

Accounts Payable

Obligation to pay current assets in the future, typically recorded at the end of an accounting period.

Notes Payable

Formal debt instruments used as a legal document to represent a borrower's obligation.

Payroll Accounting

The amount paid to employees for their services during a period.

FICA

Federal Insurance Contributions Act; taxes that fund Social Security and Medicare.

Dividends

Cash distributions of earnings declared by the board of directors.

Treasury Stock

Stock that a corporation has issued and then reacquired, reducing stockholders' equity.

Common Stock

Equity that gives shareholders voting rights and a share in earnings.

Preferred Stock

Equity that has preference rights over common stock in terms of dividends and assets.

Debt Ratio

Measures solvency by assessing the percentage of total assets financed by debt.

Earnings Per Share

A major profitability measure calculated as net income minus preferred dividends divided by the number of common shares.