Liabilities and Shareholders’ Equity Represent the Company’s Sources of Funds (i.e., How It Pays for Assets)
Liabilities represent what the company owes to others (Exhibit 6.3):
They must be measurable.
Their occurrence is probable.
Shareholders’ equity represents sources of funds through:
Equity investment
Retained earnings (what the company has earned through operations since its inception)
LIABILITIES | |
Accounts Payable | A company’s obligations to suppliers for services and products already purchased from them, but which have not been paid; represent the company’s unpaid bills to its suppliers for services obtained on credit from them. |
Notes Payable | Debt or equity securities held by the company |
Current Portion of Long-Term Debt | Portion of debt with an overall maturity of more than a year; portion due within 12 months |
Long-Term Debt | The company’s borrowings with a maturity (full repayment) exceeding 12 months |
Deferred Taxes | Potential future tax obligations arising when taxes payable to the IRS are lower than those recorded on financial statements |
Minority Interest | Equity interest in the portion of the consolidated businesses that the company does not own |
SHAREHOLDERS’ EQUITY | |
Preferred Stock | Stock that has special rights and takes priority over common stock |
Common Stock Par Value | Par value of units of ownership of a corporation |
Additional Paid-In Capital (APIC) | Represents capital received by a company ... |
Get Crash Course in Accounting and Financial Statement Analysis, Second Edition now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.