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Financial Accounting

What are stocks?

Simply put: Stocks are pieces (a.k.a. “shares”) of a company’s equity. A company can decide to sell these shares for cash. In return, they give up … Read More

Buying Treasury Stock

Treasury stock is stock that’s been repurchased by a company. There’s two situations we need to familiarize ourselves with treasury stock: Buying treasury stock Scenario: … Read More

Preferred Shares

Preferred stock is just like common stock with a few added benefits for improved security of investment. First, preferred stock owners get first dibs on … Read More

Common Stock Shares

Scenario: You run a lemonade stand, and it has become more-and-more successful. People have been wanting to buy ownership in the company, so you decide … Read More

Issued at premium

If the effective interest rate is below the stated interest rate, then the bond was issued at a discount. Since the effective interest rate is … Read More

Issued at discount

If the effective interest rate is above the stated interest rate, then the bond was issued at a discount. Since the effective interest rate is … Read More

Annuity Payments

Annuities are the periodical payments that the borrower must pay to the lender for the bond. Scenario: Your lemonade stand is doing well, and you … Read More

What is a bond?

A bond is a promise made by a borrower to pay back a lender the amount borrowed (face value) at the bond’s maturity date, plus … Read More

Payroll Tax Expense

The Payroll Tax Expense journal entry documents the employee’s tax burden. Question: Your lemonade stand has 10 employees that work 40 hours a week and … Read More