Financial Accounting For Dummies. Maire LoughranЧитать онлайн книгу.

       Accounts payable: This is a current liability reflecting the amount of money the company owes to its vendors. This category is the flip side of accounts receivable because an account receivable on one company’s balance sheet appears as an account payable on the other company’s balance sheet.

       Payroll liabilities: Most companies accrue payroll and related payroll taxes, which means a company owes its employees money but has not yet paid them. This process is easy to understand if you think about the way you’ve been paid by an employer in the past. Most companies have a built-in lag time between when employees earn their wages and when the paychecks are cut.In addition to recording unpaid wages in this account, the company also has to add in any payroll taxes or benefits that will be deducted from the employee’s paycheck when the check is finally cut.

       Short-term notes payable: Notes payable that are due in full less than 12 months after the balance sheet date are short-term — or could be the short-term portion of a long-term note. For example, a business may need a brief influx of cash to pay mandatory expenses such as payroll. A good example of this situation is a working capital loan, which a bank makes with the expectation that the loan will be paid back from the collection of the borrower’s accounts receivable.

       Long-term notes payable: If a short-term note has to be paid back within 12 months after the balance sheet date, you’ve probably guessed that a long-term note is paid back after that 12-month period! A good example of a long-term note is a mortgage. Mortgages are used to finance the purchase of real property assets (see Chapters 7 and 12).

       Retained earnings: This account shows the result of income and dividend transactions. For example, the business opens on March 1, 2021. As of December 31, 2021, it has cleared $50,000 (woohoo!) but has also paid $10,000 in dividends to shareholders. The retained earnings number is $40,000 ($50,000 – $10,000).Retained earnings accumulate year after year — therefore the “retained” in the account name. So, if in 2022 the same business makes $20,000 and pays no dividends, the retained earnings as of December 31, 2022, are $60,000 ($40,000 + $20,000).

       Paid-in capital: This element of equity reflects stock and additional paid-in capital. Nope, you’re not seeing a typo! There is a paid-in capital account called “additional paid-in capital.” In brief, here’s what the two types of equity are:Stock: Corporations raise money by selling stock — pieces of the corporation — to interested investors. Stock sold to investors usually comes in two different types: common and preferred. Each type of stock has its own characteristics and advantages, which I discuss fully in Chapter 9.Additional paid-in capital: This equity account reflects the amount of money the investors pay over the stock’s par value. Par value is the price printed on the face of the stock certificate and quite often is set at a random dollar amount. For example, if the par value of JMS, Inc. stock is $10 per share and you buy 100 shares at $15 per share, additional paid-in capital is $500 ($5 times 100 shares).