P
| Term | Meaning |
|---|---|
| P/E Ratio | A ratio used to measure investor confidence in a company and compare stocks for profitability. It is found by dividing market price per share by earnings per share (EPS). |
| Paid-in Capital | Portion of the stockholders’ equity paid in by the stockholders, as opposed to capital arising from profitable operations. |
| PAR | Equal to the nominal or face value of a security. |
| PAR Value | Amount per share set in the articles of incorporation of a corporation to be entered in the capital stocks account. It signifies a cushion of equity capital for the protection of creditors. |
| 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, carrying on a trade or business for profit and sharing resulting profits. General partners are liable for partnership debts. |
| Passive Activity Loss | Loss generated from activities in which the taxpayer does not materially participate. |
| Passive Income | Income derived from sources such as dividends, interest, royalties, rents, personal service contracts, and income from an estate or trust. |
| Patronage Dividends | Amounts paid by a cooperative to its members and customers based on the quantity or value of business conducted with or for the members during the tax year. |
| Payback Period | In capital budgeting, the time needed to recoup the cost of a capital investment. |
| Payback Period Method | A way of judging capital investments based on the minimum length of time it will take to earn back the initial investment in cash. |
| Payout Ratio | Percentage of a firm’s profits paid out to shareholders as dividends. |
| Peer Review | Process by which an accounting firm’s practice is evaluated for compliance with professional standards through an independent review by peers. |
| Penalty | Government-imposed penalties on a taxpayer for failure to perform a specific act or omitting vital information on a return. |
| Pension | Retirement plan offered by an employer to employees, usually at retirement, through a trustee who controls the plan assets. |
| Period | An interval of time with a specified length or characterized by certain conditions. |
| Periodic Inventory System | A system for determining inventory on hand by a physical count at the end of an accounting period. |
| Periodicity | The recognition that net income for any period, although tentative, is still a useful estimate for that period. |
| Perpetual Inventory System | System requiring a continuous record of all receipts and withdrawals of each inventory item. |
| 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 specializing in personal financial planning, meeting education, experience, ethics, and exam requirements. |
| Personal Financial Statements | Financial statements prepared for an individual or family to show financial status. |
| Personal Property | Movable property not affixed to land (real property). Includes tangible items like cash, cars, computers, and intangible items like royalties, patents, and copyrights. |
| Petty Cash | Small amount of cash kept on hand by a company to pay for minor expenses in an office. |
| Phantom Income | Income reported on a tax basis for which no cash or financial benefit is realized. |
| Physical Inventory | Actual count of all merchandise on hand at the end of an accounting period. |
| Plant | A building or group of buildings where something is made or processed; factory. |
| Pledged | Asset placed in a trust and used as collateral for a debt. |
| POB | Public Oversight Board, an independent board that monitors and evaluates peer reviews conducted by the SEC Practice Section (SECPS) of the AICPA’s division for CPA firms and other activities of the SECPS. |
| Pooling of Interest | Accounting method for the acquisition of another company where the acquiring company exchanges its voting common stock for the voting common stock of the acquired company under certain criteria. |
| Portfolio | Combined holding of more than one asset (stocks, bonds, etc.) by an individual or institutional investor. |
| Post-Closing Trial Balance | A trial balance prepared at the end of an accounting period after all adjusting and closing entries have been posted. |
| Post-Retirement Benefits | Pensions, health care, life insurance, and other benefits provided by an employer to retirees, dependents, or survivors. |
| Predetermined Overhead Rate | Rate used to estimate and assign overhead costs to products or jobs for each department or operating unit before the end of an accounting period. |
| Pre-emptive Right | Right giving existing stockholders the opportunity to purchase shares of a new issue before it is offered to others. |
| Preferred Stock | Type of capital stock with 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. |
| Premium Bond | Bond with a selling price above face or redemption value. |
| Prenuptial Contract | Agreement between a future husband and wife detailing how the couple’s financial affairs will be handled during the marriage and in the event of divorce. |
| Prepaid Expense | Cost incurred to acquire economically useful goods or services expected to be consumed in the revenue-earning process within the operating cycle. |
| Present Value | Current value of a given future cash flow stream, discounted at a given rate. |
| Preventive Controls | Controls aiming to prevent errors or fraud that could result in misstatements of financial statements. |
| Price Range | High/low range in which a stock has traded over a particular period. |
| Price/Earnings (P/E) Ratio | Ratio used to measure investor confidence in a company, calculated by dividing market price per share by earnings per share (EPS). |
| Primary Earnings per Share | Earnings available to common stock divided by the number of common shares outstanding. |
| Prime Rate | Interest rate charged by major U.S. banks on loans made to their preferred customers. |
| Principal | Face amount of a security, excluding any premium or interest. |
| 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. |
| Pro Forma | Presentation of financial information giving effect to an assumed event (e.g., merger). |
| Pro Rata | Distribution of an expense, fund, or dividend proportionate to ownership. |
| Product Line | The place in a factory where products are made. |
| Production | The act or process of creating something. |
| Profit | The positive difference resulting from selling products and services for more than the cost of producing them. |
| Profit Margin | Used to measure the percentage of each sales dollar resulting in net income. |
| Profit Margin Pricing | An approach to cost-based pricing where price is computed using a percentage of a product’s total costs and expenses. |
| Profit Sharing Plan | A defined contribution plan characterized by setting aside a portion of an entity’s profits in participants’ accounts. |
| Profitability | The ability to earn enough income to attract and hold investment capital. |
| Projection | Prospective financial statements including one or more hypothetical assumptions. |
| Promissory Note | Evidence of debt specifying the amount due and interest rate, with a maturity date or payable on demand. May or may not accompany other instruments like a mortgage. |
| Property, Plant, and Equipment | Long-term tangible assets used in the continuing operation of a business. |
| Proprietorship | Business owned by an individual without the limited liability protection of a corporation or LLC. Also known as a sole proprietorship. |
| Prospective Financial Information | Forecast: Prospective financial statements presenting an entity’s expected financial position, results of operations, and changes in financial position based on expected conditions and actions. Projection: Prospective financial statements presenting an entity’s expected financial position, results of operations, and changes in financial position based on hypothetical assumptions. |
| Prospectus | Major part of the registration statement filed with the SEC for public offerings, describing securities or partnership interests to be issued and sold. |
| Proxy | Document authorizing someone other than the shareholder to vote the stock owned by the shareholder. |
| Public Company Accounting Oversight Board (PCAOB) | A private-sector, non-profit corporation created by the Sarbanes-Oxley Act of 2002 to oversee auditors of public companies, protecting the interests of investors and furthering the public interest in the preparation of informative, fair, and independent audit reports. |
| Public Offering | Offering shares to the public, generally done through SEC filings. |
| Public Oversight Board (POB) | An independent oversight board composed of public members, monitoring and evaluating peer reviews conducted by the SEC Practice Section (SECPS) of the AICPA’s division for CPA firms and 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. |
| Purchase Order | Written authorization to a vendor to deliver specified goods or services at a stipulated price. |
| Purchases | Temporary account under the periodic inventory system to record the total cost of all merchandise purchased for resale during an accounting period. |
| Purchases Discounts | Discounts taken by merchants for prompt payment of merchandise purchased for resale. |
| Purchases Returns and Allowances | Contra account under the periodic inventory system to accumulate cash refunds, credits on account, and other allowances made by suppliers for unsatisfactory or incorrect merchandise originally purchased for resale. |
| Push-Down Accounting | Accounting method transferring values arising from an acquisition to the accounts of an acquired company. |
| Puts | An option to sell a certain number of shares of stock at a stated price within a certain period. The gain or loss on a put is short or long term depending on the holding period of the stock involved. |