Book value The total assets of a company less its liabilities; stockholders’ equity or net assets.

Book value per share The equity of the owner of one share of stock in the net assets of the corporation.






Complex capital structure A capital structure that includes exercisable stock options or convertible preferred stocks and bonds.

Comprehensive income "The change in a company’s equity from sources other than owners during a period; it includes net income, changes in unrealized investment gains and losses, and other items affecting equity."

Cumulative effect of an accounting change The effect that a different accounting principle would have had on the net income of prior periods if it had been used instead of the old principle.






Deferred Income Taxes The account used to record the difference between the Income Taxes Expense and Income Taxes Payable accounts.

Deficit A debit balance in the Retained Earnings account.

Diluted earnings per share The net income applicable to common stock divided by the sum of the weighted-average number of common shares outstanding plus potentially dilutive securities.

Discontinued operations Segments of a business that are no longer part of its ongoing operations.






Extraordinary items Events or transactions that are both unusual in nature and infrequent in occurrence.






Income from continuing operations The operating income section of the income statement when a company has both continuing and discontinued operations.

Income tax allocation An accounting method used to accrue income taxes expense on the basis of accounting income whenever there are differences between accounting and taxable income.






Net of taxes "A phrase indicating that the effect of applicable taxes (most often, income taxes) has been considered in determining the overall effect of an item on the financial statements."






Potentially dilutive securities "Stock options and convertible preferred stocks or bonds, which have the potential to dilute earnings per share."






Quality of earnings The substance of earnings and their sustainability into future accounting periods.






Restriction on retained earnings The required or voluntary identification of a portion of retained earnings that cannot be used to declare dividends.

Restructuring "The estimated cost associated with a change in a company’s operations, usually involving the closing of facilities and the laying off of personnel."

Retained earnings "Stockholders’ claims to assets arising from the earnings of the business; the accumulated earnings of a corporation from its inception, minus any losses, dividends, or transfers to contributed capital."






Segments "Distinct parts of business operations, such as a line of business or a class of customer."

Simple capital structure "A capital structure in which there are no stocks, bonds, or stock options that can be converted into common stock."

Statement of stockholders’ equity A financial statement that summarizes changes in the components of the stockholders’ equity section of the balance sheet. Also called statement of changes in stockholders’ equity.

Stock dividend A proportional distribution of shares among a corporation’s stockholders.

Stock split An increase in the number of outstanding shares of stock accompanied by a proportionate reduction in the par or stated value.






Write-down The recording of a decrease in the value of an asset below the carrying value on the balance sheet and the reduction of income in the current period by the amount of the decrease. Also called write-off.