ACCT 300B Exam 1 Study Guide

Rate on interest

The price of money, determined by the demand and supply of funds in a money market where there are borrowers and lenders.

effective rate

The rate of return earned by bondholders is called the

Stockholders' Equity

Additional paid in capital and retained earnings account

stock splits

All of the following decrease Retained Earnings, except:

Proportional method

Allocates the proceeds using the proportion of the two amounts, based on fair values

Current liability

A liability that must be paid within one year or within the entity's operating cycle if the cycle is longer than a year

Lump-sum purchase

Purchase of multiple assets for one price; also called a basket purchase

Discounts

Reductions from list price given by a seller to buyers who either give up some marketing function or provide the function themselves

(a) No effect; (b) decreases; (c) no effect; (d) decreases

Satchel Inc. purchases 10,000 shares of its own previously issued $10 par common stock for $290,000. Assuming the shares are held in the treasury with intent to reissue, what effect does this transaction have on (a) net income, (b) total assets, (c) total paid-in capital, and (d) total stockholders' equity?

a difference between the reacquisition price and the net carrying amount of the debt which should be recognized in the period of redemption.

The generally accepted method of accounting for gains or losses from the early extinguishment of debt is to compute them as

coupon rate, nominal rate, or stated rate

The interest rate written in the terms of the bond indenture is known as the

total liabilities.

The numerators in the debt ratio is

Contractual rate

The rate written on the bond

the sum of net income plus interest expense and income tax expense by interest expense.

The times interest earned ratio is computed by dividing

Dividends

Three dates for dividends: payment, record, declaration

Service-type warranty

Warranty that provides an additional service beyond the assurance-type warranty

Assurance-type warranty

Warranty that the product meets agreed-upon specifications in the contract at the time the product is sold.

Stock dividends

What are dividends with no retained earnings?

Convertibles

What may be exchanged for equitable securities?

False

When bonds are issued with detachable stock warrants, and the fair market value is known for both securities, the price is allocated between two securities using the incremental method.

Incremental method

Where a company cannot determine the fair value of either the warrants or the bonds.

Consolidated subsidiary

Which for the following is not n example of off-balance sheet financing?