Financial Accounting - Stockholders’ Equity

These flashcards cover key terms and concepts related to stockholders' equity discussed in the financial accounting lecture.

Accounting Equation

Assets = Liabilities + Stockholders’ Equity

Paid-in Capital

The amount stockholders have invested in the company.

Retained Earnings

The amount of earnings the company has kept or retained over its life, not distributed in dividends.

Treasury Stock

A company’s own issued stock that it has repurchased.

Corporation

An entity that is legally separate from its owners and pays its own income taxes.

Angel Investors

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

Initial Public Offering (IPO)

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

Publicly Held Corporation

Allows public investment, has more stockholders, and is regulated by the SEC.

Privately Held Corporation

Does not allow public investment, has fewer stockholders, and is not regulated by the SEC.

Stockholder Rights

The rights include voting on matters, receiving dividends, and sharing in the distribution of assets.

Limited Liability

A stockholder can lose no more than the amount invested in the corporation.

Double Taxation

Corporate earnings are taxed twice: at the corporate level and again at the individual stockholder level.

Common Stock

Represents ownership in a corporation and a claim on a portion of the company’s assets and earnings.

Par Value

The legal capital per share of stock assigned when the corporation is first established.

Preferred Stock

A class of stock that typically has a claim to dividends before common stock and a preference in asset distributions upon liquidation.

Treasury Stock

Shares that were once part of the outstanding shares but were later repurchased by the company.

Stock Dividend

A distribution of additional shares of stock, rather than cash, to stockholders.

Stock Split

A large stock dividend that results in a reduction of the par value per share.

Return on Equity (ROE)

A measure of a company's profitability that reveals how much profit a company generates with the money shareholders have invested.

Earnings per Share (EPS)

A company's profit divided by the outstanding shares of its common stock.

Price-Earnings Ratio (PE Ratio)

A ratio used to value a company, calculated by dividing the current share price by its earnings per share.