Definition of Stocks Stocks, or shares of capital stock, represent an ownership interest in a corporation. Every corporation has common stock. Some corporations issue preferred stock in addition to its common stock. Shares of common stock do not have maturity dates. Stocks pay dividends,…
Definition of Retained Earnings Retained earnings is the cumulative amount of earnings since the corporation was formed minus the cumulative amount of dividends that were declared. Retained earnings is the corporation’s past earnings that have not been distributed as dividends to its stockholders. Are Retained…
Three meanings come to mind when you ask about principles of accounting…
Definition of Contingent Liability A contingent liability is a potential liability that may or may not become an actual liability. Whether the contingent liability becomes an actual liability depends on a future event occurring or not occurring. In accounting, some contingent liabilities…
Definition of Dividends Cash dividends are a distribution of a company’s profits. Financial Statements of a Corporation The main financial statements of a corporation are: Where Dividends Appear on the Financial Statements The dividends declared and paid by a corporation in the…
Definition of Debtor A debtor is a person or enterprise that owes money to another party. The party to whom the money is owed might be a supplier, bank, or other lender who is referred to as the creditor. Definition of Creditor A creditor is…
Definition of Revenue Revenue is the amount a company receives from selling goods and/or providing services to its customers and clients. A company’s revenue, which is reported on the first line of its income statement, is often described as sales or service revenues. Hence,…
Definition of the Cash Basis of Accounting Definition of the Accrual Basis of Accounting The accrual basis of accounting provides a better picture of a company’s profits during an accounting period for the following reasons: The accrual basis of accounting also provides…
Definition of Accrual Basis of Accounting Under the accrual basis of accounting (or accrual method of accounting), revenues are reported on the income statement when they are earned. When the revenues are earned but cash is not received, the asset accounts receivable will be…
Identify and Describe Current Liabilities Analyze, Journalize, and Report Current Liabilities Define and Apply Accounting Treatment for Contingent Liabilities Prepare Journal Entries to Record Short-Term Notes Payable Record Transactions Incurred in Preparing Payroll