Ch. 10

Created by Mike3288 

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30 terms · Current Liabilities, Payroll, & Long-Term Liabilities

Bond Discount

Excess of a bond's maturity value over its issue price. Also called a "discount (on a bond)."

Bond Premium

Excess of a bond's issue price over its maturity. Also called a "premium."

Bonds Payable

Groups of notes payable issued to multiple lenders called bondholders.

Carrying Amounts of Bonds

Bonds payable minus the discount or plus the premium.

Contingent Liability

A potential Liability that depends on some future event.

Convertible Bonds

Bonds that may be converted into the common stock of the issuing company at the option of the investor.

Current Maturity

Amount of the principle that is payable w/in 1 yr. Also called "current portion of notes payable."

Current portion of Notes Payable

Amount of the principle that is payable w/in 1 yr. Also called "current maturity."

Debentures

Unsecured bonds backed only by the good faith of the borrower.

Discount (on a bond)

Excess of a bond's maturity value over its issue price. Also called a "bond discount."

Effective Interest Method

Method of amortizing bond premium or discount that uses the present-value concepts covered in appendix A.

Effective Interest Rate

Interest rate that investors demand in order to loan their money. Also called the "Mkt interest rate."

Employee Compensation

A major expense. Also called "payroll."

Federal Insurance Contributions Act (FICA) Tax

Tax that is withheld from employees' pay & matched by the employer. Also called "S.S. tax."

Gross Pay

Total amount of salary, wages, commisions, or any other employee compensation before taxes & other deductions.

Leverage

Earning more income on borrowed money than the related interest expense, thereby increasing the earnings for the owners of the biz.

Market Interest Rate

Interest rate that investors demand in order to loan their money. Also called the "effective interest rate."

Mortgage

Borrower's promise to transfer the legal title to certain assets to the lender if the debt is not paid on schedule.

Net (Take-Home) Pay

Gross pay minus all deductions. The amount of compensation that the employee actually takes home.

Par Value

The amount a borrower must pay back to the bondholders on the maturity date. Alson called principle amount or maturity value

Payroll

A major expense. Also called "employee compensation."

Premium

Excess of a bond's issue price over its maturity value. Also called "bond premium."

Present Value

Amount a person would invest now to recieve a greater amount in the future.

Secured Bonds

Bonds that give bondholders the right to take specified assets to the issuer if the issuer fails to pay principal or interest.

Short-Term Note Payable

Promised note payable due w/in 1 yr; a common form of financing.

S.S. (FICA) Tax

Federal Insurance Contributions Act, which is withheld from employees' pay & matched by the employer. Also called "FICA tax."

Stated Interest Rate

Interest rate that determines the amount of cash interest the borrower pays & the investor recieves each yr.

Term Bonds

Bonds that all mature at the same time.

Unemployment Compensation Tax

Payroll tax paid by employers to the gov't, which uses the money to pay unemployment benefits to ppl who are out of work.

Withheld Income Tax

Income tax deducted from employees' gross pay.

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