Shareholders' Equity and Accounting Changes

These flashcards cover key concepts related to shareholders' equity, stock types, accounting changes, and financial reporting.

Shareholders' Equity

The residual interest in the assets of a corporation after deducting liabilities.

Accumulated Other Comprehensive Income

A component of shareholders' equity that includes net income and certain other gains and losses that are not part of net income.

Paid-In Capital

Money a company raises by issuing shares to investors in exchange for ownership in the corporation.

Treasury Shares

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

Common Stock

A type of stock that gives shareholders voting rights but comes after preferred stock in terms of asset claims.

Authorized Common Stock

The total number of shares that a corporation is authorized to issue as stated in its corporate charter.

Preemptive Right

The right of existing shareholders to purchase additional shares before the company offers them to new investors.

Preferred Stock

A class of stock that has preferential claims on assets and earnings compared to common stock.

Participating Preferred Stock

Preferred stock that may receive additional dividends beyond the stated amount.

Diluted Earnings Per Share (EPS)

A calculation of earnings per share that considers all potential shares that could be converted to stock.

Retained Earnings

The accumulated net income that has not been distributed as dividends to shareholders.

EPS Calculation

The process of calculating earnings per share based on net income allocated to common shares.

Accounting Principle Change

A change that occurs when a company adopts a different accounting standard or method.

Retrospective Approach

An accounting method where prior financial statements are adjusted to reflect a new accounting principle.

Prospective Approach

An accounting method where changes are applied only from the current period forward.

Change in Accounting Estimate

An adjustment to the financial statements that reflects new information; does not require retrospective application.

Accounting Change Disclosure

Notes in the financial statements that provide information about changes in accounting principles or estimates.

Fair Value Method

An accounting approach where the value of an asset or liability is based on current market rates.

Stock Split

An increase in the number of outstanding shares of a company as a means to lower the trading price of its stock.

Dividends Payable

Liabilities that represent the amount a company owes to shareholders for declared dividends.