Stockholders’ Equity Review

These flashcards cover key vocabulary terms related to stockholders' equity and financial accounting concepts.

Stockholders' Equity

The residual interest in the assets of the entity after deducting liabilities; it represents the owners' claim on the business.

Paid-in Capital

The amount that stockholders have invested in the company through the purchase of shares.

Retained Earnings

The accumulated net income of a company that has not been distributed to its shareholders as dividends.

Treasury Stock

A company's own stock that has been repurchased and is held in the company's treasury.

Common Stock

Type of equity security that represents ownership in a corporation and a claim on a portion of profits.

Preferred Stock

A class of stock that gives shareholders preference in the payment of dividends and upon liquidation.

Par Value

The nominal or face value of a stock, as stated in the corporate charter, that does not necessarily reflect market value.

IPO (Initial Public Offering)

The first time a corporation issues stock to the general public to raise capital.

Dividends Payable

Liability account that represents cash dividends declared by a corporation but not yet paid to shareholders.

Stock Dividend

A payment to shareholders in the form of additional shares rather than cash.

Stock Split

A corporate action that increases the number of shares outstanding while decreasing the par value per share.

Cumulative Preferred Stock

Preferred stock that accumulates dividends if they are not paid in a given year, which must be paid before common stock dividends.

Noncumulative Preferred Stock

Preferred stock that does not accumulate unpaid dividends if they are not declared.

Contra Equity Account

An account that reduces the balance in equity accounts, such as treasury stock.

Authorized Shares

The maximum number of shares a corporation is legally allowed to issue as set forth in its corporate charter.

Issued Shares

The number of shares that have been sold to and are held by shareholders.

Outstanding Shares

The shares that are currently held by shareholders, including restricted shares.

Angel Investors

Wealthy individuals who provide capital for startups in exchange for ownership equity.

Venture Capital

Financial capital provided to early-stage, high-potential, high-risk startup companies.