Paid in Capital - Portion of the stockholders'
EQUITY which was paid in by the stockholders, as opposed
to CAPITAL arising from profitable operations.
Parent Company - Company that has a controlling
interest in the COMMON STOCK of another.
Partnership - Relationship between two or more
persons based on a written, oral, or implied agreement
whereby they agree to carry on a trade or business for
profit and share the resulting profits. Unlike a
CORPORATION'S shareholders, the partnership's general
partners are liable for the DEBTS of the partnership.
(See GENERAL PARTNERSHIP, LIMITED LIABILITY PARTNERSHIP,
LIMITED PARTNERSHIP.)
Par Value - Amount per share set in the ARTICLES
OF INCORPORATION of a CORPORATION to be entered in the
CAPITAL STOCKS account where it is left permanently and
signifies a cushion of EQUITY capital for the protection
of CREDITORS.
Passive Activity Loss - LOSS generated from
activities involved in the conduct of a trade or
business in which the taxpayer does not materially
participate.
Peer Review - Process by which an accounting
firm's practice is evaluated for compliance with
professional standards. The objective is achieved
through the performance of an independent review by
one's peers.
Pension - Retirement plan offered by an employer
for the benefit of an employee, usually at retirement,
through a TRUSTEE who controls the plan ASSETS. (See
EMPLOYEE BENEFIT PLAN.)
Perpetual Inventory - System that requires a
continuous record of all receipts and withdrawals of
each item of INVENTORY.
Personal Financial Planning - Process for
arriving at a comprehensive plan to solve an
individual's personal, business, and financial problems
and concerns.
Personal Financial Specialist (PFS) - CERTIFIED
PUBLIC ACCOUNTANT who specializes in PERSONAL FINANCIAL
PLANNING and completes a series of requirements that
include education, experience, ethics and an exam.
Personal Financial Statements - FINANCIAL
STATEMENTS prepared for an individual or family to show
financial status.
Personal Property - Movable property that is not
affixed to the land (REAL PROPERTY). Personal property
includes tangible items such as cash, cars and
computers, as well as intangible items, such as
royalties, patents and copyrights.
Phantom Income - Income reported on a TAX BASIS
for which no cash or financial benefit is realized.
Pledged Asset - ASSET placed in a TRUST and used
as COLLATERAL for a DEBT.
Pooling of Interest - Used to account for the
acquisition of another company when the acquiring
company exchanges its voting COMMON STOCK for the voting
common stock of the acquired company when certain
criteria are met.
Post-Retirement Benefits - PENSIONS, health care,
life insurance and other benefits that are provided by
an employer to retirees, their dependents, or survivors.
Prepaid Expense - Cost incurred to acquire
economically useful goods or services that are expected
to be consumed in the revenue-earning process within the
operating cycle.
Preferred Stock - Type of CAPITAL STOCK that
carries certain preferences over COMMON STOCK, such as a
prior claim on DIVIDENDS and ASSETS.
Premium - (1) Excess amount paid for a BOND over
its face amount. (2) In insurance, the cost of specified
coverage for a designated period of time.
Present Value - CURRENT VALUE of a given future
cash flow stream, discounted at a given rate.
Prime Rate - Rate of interest charged by major
U.S. banks on loans made to their preferred customers.
Principal - Face amount of a SECURITY, exclusive
of any PREMIUM or INTEREST. The basis for INTEREST
computations.
Private Placement - Sales of SECURITIES not
involving a PUBLIC OFFERING and exempt from registration
pursuant to certain EXEMPTIONS.
Privilege - A right or immunity granted as a
peculiar benefit advantage.
Privity - An interest in a transaction, contract
or legal action to which one is not a party, arising out
of a relationship to one of the parties.
Profit Sharing Plan - DEFINED CONTRIBUTION PLAN
characterized by the setting aside of a portion of an
entity's profits in participant's accounts. (See
EMPLOYEE BENEFIT PLAN.)
Pro Forma - Presentation of financial information
that gives effect to an assumed event (e.g., MERGER).
Projection - Prospective FINANCIAL STATEMENTS
that include one or more hypothetical assumptions.
Promissory Note - Evidence of a DEBT with
specific amount due and interest rate. The note may
specify a maturity date or it may be payable on demand.
The promissory note may or may not accompany other
instruments such as a MORTGAGE providing security for
the payment thereof. (See DEMAND LOAN.)
Proprietorship - Business owned by an individual
without the limited liability protection of a
CORPORATION or a LIMITED LIABILITY COMPANY (LLC). Also
known as sole proprietorship.
Pro Rata - Distribution of an expense, fund, or
DIVIDEND proportionate with ownership.
Prospective Financial Information (forecast and
projection) - Forecast: Prospective financial
statements that present, to the best of the responsible
party's knowledge and belief, an entity's expected
financial position, results of operations, and changes
in financial position. A financial forecast is based on
the responsible party's assumptions reflecting
conditions it expects to exist and the course of action
it expects to take. Projection: Prospective
financial statements that present, to the best of the
responsible party's knowledge and belief, given one or
more hypothetical assumptions, an entity's expected
financial position, results of operations, and changes
in financial position.
Prospectus - Major part of the registration
statement filed with the SECURITIES AND EXCHANGE
COMMISSION (SEC) for PUBLIC OFFERINGS. A prospectus
generally describes SECURITIES or partnership interests
to be issued and sold.
Proxy - Document authorizing someone other than
the shareholder to exercise the right to vote the stock
owned by the shareholder.
Public Offering - Offering shares to the public.
Generally done through SEC filings.
Public Oversight Board (POB) - The POB is an
independent oversight board, composed of public members,
which monitors and evaluates peer reviews conducted by
the SEC Practice Section (SECPS) of the AICPA's Division
for CPA Firms as well as other activities of the SECPS.
Purchase Method of Accounting - ACCOUNTING for a
MERGER by adding the acquired company's ASSETS at the
price paid for them to the acquiring company's assets.
Push-Down Accounting - Method of ACCOUNTING in
which the values that arise from an acquisition are
transferred or "pushed down" to the accounts of an
acquired company.
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