Week 6

These flashcards contain essential vocabulary related to long-term financing in accounting, including terms related to equity, share capital, and other financial concepts.

Share Capital

The capital raised by a company through the issuance of shares.

Ordinary Shares

Shares that represent ownership in a company and entitle holders to dividends after all other claims are satisfied.

Preference Shares

Shares that give holders a preferential right to dividends before ordinary shareholders.

Limited Liability Companies

Companies that limit the liability of their owners to the capital invested, protecting personal assets.

Reserves

Profits retained by a company for reinvestment rather than distributed as dividends.

Debentures

Long-term securities yielding a fixed rate of interest, issued by a company and secured against assets.

Retained Earnings

The portion of net income that is retained within a company rather than being paid out as dividends.

Bonus Issue

An issue of free shares to existing shareholders, converting reserves into share capital.

Rights Issue

An offer of new shares to existing shareholders in proportion to their current holdings, usually at a lower market price.

Dividends

Payments made by a corporation to its shareholder members, often derived from profits.

Capital Reserves

Reserves created from the revaluation of assets or selling shares above their nominal value that cannot be distributed as dividends.

Equity

The owners' claim on the assets of a business after all liabilities have been deducted.