ACC 201 (9, 10, 11) Exam
face value
Amount of principal due at the maturity date of the bond
capital leases
Long-term leases in which the lessor transfers substantially all risk and rewards of ownership to the lessee.
proper structure of a corporation
Stockholders select the board of directors, who select officers
common stock
Term used to describe the total amount paid in by stockholders for the shares they purchase.
Stockholders' Equity
The owners' claim to assets.
cash flows from investing activities
cash activities related to non current assets
Cash flows from acquiring and disposing of long-term assets are classified as
investing activities
A bond issuing at 101.25 means that the bond
sold for $1,012.50
time value of money
the idea that a cash flow in the future is less valuable than a cash flow at present
discount
when a bond sells at a price below face value, due to the yield being greater than the stated rate of interest
premium
when a bond's selling price is above face value; usually -
dividends
Amount of profit paid to shareholders per share per year
Cash Flow Adequacy Ratio
Cash from operations divided by expenditures for fixed asset additions and acquisitions of new businesses
preferred stock
a class of stock that generally does not give voting rights, but grants specific guarantees and dividend preferences
indirect method
a method that computes operating cash flows by adjusting NET INCOME for items that do NOT affect cash flows
annuity
a series of equal cash flows at regular intervals
bond
a type of note that requires the issuing entity to pay the face value of the bond to the holder when it matures and periodic interest at a specific rate
factors for classifying leases as capital leases
asset will be retained by lessee at end of term, lessee's payments are about same amount as payments on a note payable to purchase asset, and the lessee will use most of the asset's estimated useful life
callable bonds
bonds that give the borrower the right to pay off the bonds prior to their due date
if 100 shares of $50 par value common stock are sold at par, then the correct entry would include a credit to ...
common stock for 5,000
free cash flow
net cash provided by operating activities after adjusting for capital expenditures and cash dividends paid
when a contract establishes a relationship between an amount borrowed and one or more future cash flows, the initial amount is known as...
present value
Treasury Stock
previously issued stock that is repurchased by the issuing corporation
deficit
the accumulated losses over the entire life of a corporation that have not been paid out in dividends
500 shares of common stock for $12 per share; then an additional 100 shares of stock for $15 per share. assuming the board has placed a stated value of $10 per share on this no-par stock... the balance in the paid-in capital woudl be
$1,500 (5*100+2*500)
If the stated interest rate is 12% per year, but it is compounded semiannually, then the adjusted rate used for present or future value calculations will be
6% per 6-month period
Which of the following is true for a corporation that issues 1,000 shares of $2 par common stock at $5 per share?
Total stockholders' equity will increase by $5,000
future value
the amount to which money will grow in the future when compound interest is applied
When using the indirect method to determine operating cash flows, how is the issuance of stock to retire a long-term debt shown on a statement of cash flows?
noncash investing or financing activity
Cash flows from acquiring and selling products are classified as
operating activities
which table do you use for the following question: Mark is planning on making an investment in a new computer system. He wants to know how much he must invest to have $9,000 in 4 years if the interest rate is 5% per year?
present value of a single amount; and the ansewr is $7,404.30
pierson co. issues $400,000 of 6% 20-year bonds at 98. Straight-line amortization was used. How much bond interest expense is recorded on the annual interest payment date?
$24,400 (400,000-392,000=8,000/20=400....)
Manatee Manufacturing sells a piece of equipment to make room for new machinery. Manatee will receive the sales price of $50,000 at the end of 4 years. Assuming interest at a rate of 6% per year, the Present Value of this future cash flow is how much?
$39,604.50
a bond with a total face value of 5,000 paying interest of 5% has a current price quote of 102. This bond would sell for....
$5,100 (5,000*1.02)
premium bond on a 400,000 bond payable is 5,200... what would be the carrying value of the bonds shown on the balance sheet of that year?
405,200
a co. issues a $10,000, 8%, 10-year bond on Jan. 1 for $10,420. Interest is paid annually on jan 1. if the co. uses straight-line method of amortization of bond discounts and premiums, the present or future value calculations will be ....
6% per 6-month period
The Kaplan Group sold $200,000 of 10-year bonds for $190,000. The face rate on the bonds was 8% and interest is paid annually on December 31. What entry would be made on December 31 when the interest is paid? (Numbers are omitted.)
Interest Expense Discount on Bonds Payable Cash
par value
a value assigned to a share of stock and printed on the stock certificate
straight line method
an interest amortization method that amortizes equal amounts of premium or discount to interest expense each period
cash flows from financing activities
cash activities related to non current activities
present value
determinations of present amounts based on expected future cash flows
Cash flows from borrowing and paying off a 90-day bank loan are classified as
financing
a discount is usually...
+
This company was incorporated as a new business on January 1, 2019. The company is authorized to issue 50,000 shares of $5 par common stock and 10,000 shares of 6%, $10 par, cumulative, participating preferred stock. On January 1, 2019, the company issued 8,000 shares of the common stock for $15 per share and 2,000 share of the preferred stock for $30 per share. Net income for the year ended December 31, 2019 was $375,000.Refer to Lanier Tech. What is the amount of the company's total capital stock at December 31, 2019?
$180,000
Tom liquidates an investment, and his proceeds will be received in 8 annual payments of $10,000 each with interest computed at 7%. What is the Present Value of this Annuity?
$59,713.00
A corporation issued $150,000 of 10-year bonds at the stated rate of 8%, with interest payable semiannually. How much cash will the bond investors receive at the end of the first interest period?
$6,000
A graphics design company issued bonds in the amount of $1,000,000 with a stated interest rate of 8%. If the interest is paid semiannually and the bonds are due in 10 years, what would be the total amount of interest paid over the life of the bonds?
$800,000
Total stockholders' equity includes $50,000 of common stock with a stated value of $0.50, and 5,000 shares of treasury stock with a total cost of $25,000. How many total shares are outstanding?
$95,000
Suppose a corporation issues 5,000 shares of $1 par common stock for $30 per share. In addition to the increase in cash, what effect does this transaction have on the accounting equation?
Paid-in capital in excess of par increases $145,000.