part 1.statement of comprehensive income Flashcards
statement of comprehensive income
net income + other comprehensive income
accumulated other comprehensive income
is part of equity in the balance sheet, they are part of owner’s equity. these are unrealized gains/losses
accumulated other comprehensive income
once any of these items are realized they pass to net income
net income
is closed to retained earnings
comprehensive income
is closed to accumulated other comprehensive income
retained earnings and accumulated other comprehensive income
are part of owner’s equity
trading securities
securities that are held by a company that it intends to buy and sell for a short term profit. the change in value are recorded in the income statement in operating income.
these securities are intended to be sold in the short term and profit is made when sold.
available for sale securities
this is a default category. these securities are held and will be sold by the company later on whenever is convenient.
these securities are recorded at FMV. gains and losses are recorded in other other comprehensive income and will become part of owner’s equity
treasury stock
is a contra owner’s equity account, a direct reduction to owner’s equity.
stocks represent a claim on the company’s assets and earnings. as you acquire more stocks in a company, your ownership stake in the company becomes greater.
a company raise capital by selling part of the company, which is known as issuing stock.
issuing stock is called equity financing. the person that buys stock in another company the only benefit they get from this transaction is the hope that the company does good and the stocks increase their price in the future and they get more money for those stocks when they decide to sell it in the future.
when you buy a bond instrument, you are guaranteed the return of your money (the principal) plus the promised interest payments.
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capital stock
is both common stock and preferred stock.
