ACCOUNTING TERMS - ACCOUNTING DICTIONARY - ACCOUNTING GLOSSARY
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SOLVENCY is a companys long-term ability to meet all financial obligations.
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SHARE APPLICATION MONEY is that money received by a company during an IPO. Payments received for a subscription of stock is normally received over the IPO life. For example: Widgets Limited has been registered with an authorized capital of $2,00,000 divided into 2,000 shares of $100 each of which, 1,000 shares were offered for public subscription at a premium of $5 per share, payable as:
- on application $10
- on allotment $25 (including premium)
- on first call $40
- on final call $30
For a total of $105/share
The amounts received would be carried as a current liability until such time as the stock is issued, then it would be considered as part of equity.
WARRANTY is a guarantee given to a buyer from a seller that the goods or services purchased will perform as promised, or a refund will be given, repair will be done at no charge, or an exchange made.