A glossary for that glossy report

Accounts payable Money owed for services or goods purchased on credit. Accounts receivable What credit customers owe to the company. ... less allowances Some customers will fail to pay their bills. The company estimates the bad debt and subtracts it from accounts receivable.

Accrued expenses payable Money owed regularly (wages, interest on loans, fees to attorneys, pension funds) but not paid as of the balance sheet date.

Capital in excess of par Amount paid for stock by stockholders over the arbitrarily set par value. If par value is $5 and stock sells for $22, the difference ($17) is recorded as capital in excess of par.

Cash Just what you'd expect, petty cash and money in the bank.

Common stock People holding common stock have the right to vote on company policy; they are paid dividends after preferred stockholders. It's the most frequent type of stock issued.

Cost of goods sold How much raw materials cost and what was spent to get them into finished products (includes shipping, labor, rent, electricity, etc.).

Current assets What the company owns and expects to use within a year.

Current liabilities What the company owes and expects to pay off with in a year.

Depreciation An estimate of the decline in useful value of an asset. If a building is expected to be useful to the company for 20 years and cost $100,000 to build, each year $5,000 may be written off as an expense.

Dividends payable to stockholders Amount of dividends company has pledged to pay to stockholders.

Interest The regular amount paid to bondholders for the use of their money.

Inventories Raw materials, partly finished and finished products yet to be sold.

Marketable securities Temporary investments of idle cash in commercial paper, government sercurities, and stock. Amount shown is usually at cost or market value, whichever is lower.

Notes payable Money owed to a bank or other lenders.

Preferred stock People holding preferred stock get paid dividends before common stockholders but seldom have voting rights.

Prepaid expenses Services paid for ahead of time and considered assets until used. For instance, a year's worth of rent fully paid for in January.

Retained earnings What's put back into the company out of net income/profit/earnings after dividends are paid.

Selling and administrative expenses Includes salesmen's and executives' salaries, advertising, travel, entertainment, and office costs.

Stockholder's equity Portion of the company that stockholders own. What's left after all debts are subtracted from total assets. Includes preferred and common stock, capital in excess of par (or capital surplus), retained earnings (or earned surplus).

Treasury stock Shares issued by the company, then bought back by the company (usually for distribution to employees or because the company thinks the market price is too low).

About these ads
Sponsored Content by LockerDome

We want to hear, did we miss an angle we should have covered? Should we come back to this topic? Or just give us a rating for this story. We want to hear from you.




Save for later


Saved ( of items)

This item has been saved to read later from any device.
Access saved items through your user name at the top of the page.

View Saved Items


Failed to save

You reached the limit of 20 saved items.
Please visit following link to manage you saved items.

View Saved Items


Failed to save

You have already saved this item.

View Saved Items