PREMIUM ON CAPITAL STOCK Definition

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PREMIUM ON CAPITAL STOCK is excess received over the par value of stock issued. The premium account is shown under the paid-in capital section of stockholders equity because it resulted from the issuance of stock. It is not an income statement account since the company earns profit by selling goods and services to outsiders, not by issuing shares of stock to owners.

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PROFIT BEFORE TAXES (PBT) is a profitability measure that looks at a companys profits before the company has to pay income tax. This measure deducts all expenses from revenue including interest expenses and operating expenses, but it leaves out the payment of tax.

CONSTRAINT is a limiting factor to business activity.

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