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Accounting Chapter 10
Terms in this set (24)
a debt that a company reasonably expects to pay 1) from existing current assets or through the creation of other current liabilities, and 2) within one year or the operating cycle, whichever is longer.
different types of current liabilities
notes payable, accounts payable, unearned revenues, and accrued liabilities such as taxes, salarlies and wages, and interest.
an obligation in the form of a written note
obligations that the company expects to pay more than one year in the future.
a form of interest-bearing note payable issues by corporations, universities and governmental agencies.
have specific assets of the issuer pledges as a collateral for the bonds.
issued against the general credit of the borrower.
bonds that can be converted into common stock at the bondholder's option
bonds that the issuing company can redeem (buy back) at a stated dollar amount prior to maturity
issued to the investor to provide evidence of the investor's claim against the copany
the amount of principal due at the maturity date
the date that the final payment is due to the investor from the issuing company
contractual interest rate
the rate used to determine the amount of cash interest the borrower pays and the investor receives
time value of money
term used to indicate the relationship between time and money -- that a dollar received today is worth more than a dollar promised at sometime in the future.
the value today of an amount to be received at some date in the future after taking into account current interest rates.
market interest rate
the rate investors demand for loaning funds.
the difference between the face value of a bond and its selling price when a bond is sold for less than its face value
the difference between the selling price and the face value of a bond when a bond is sold for more than its face value
measure the ability of a company to survive over a long period of time.
times interest earned ratio equation
income before interest or taxes/interest expense
an intentional effort by a company to structure its financing arrangements so as to avoid showing liabilities on its balance sheet.
events with uncertain outcomes that may represent potential liabilities.
a contractual agreement allowing one party (the lessee) to use the asset of another party (the lessor) ; accounted for as a rental
a contractual agreement allowing one party (the lessee) to use the assets of another party (the lessor); accounted for like a debt-financed purchase by the lessee.
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