accounting final
Accounts payable
Amounts to be paid in the future for goods or services already acquired
Convertible Bonds
Bonds that can be converted into common stock at the bondholder's option
Callable Bonds
Bonds that give the issuer the option to retire them at a stated amount prior to maturity.
Secured Bonds
Bonds that have specific assets of the issuer pledged as collateral.
what are the two criteria to record a contingent liability
probable (likely to occur) and a reasonable estimate of the liability can be made.
Liabilities
probable future sacrifices of economic benefits
As warranty claims are paid to customers or related expenditures are made, the estimated liability is _____.
reduced
when do you not record a transaction for bonds payable
when a bondholder sells to another investor
when is the bond certificate issued?
when the borrower receives funds
are long-term liabilities and current liabilities recorded on the balance sheet?
yes
discount for issue price
below face value
When bonds are issued by a company, the accounting entry typically shows an
increase in assets and an increase in liabilities
when do you record a transcation for bonds payable
issuing bonds, buying bonds back, or when a bondholder converts bonds to common stock
A company would repurchase its own stock for all of the following reasons EXCEPT:
it believes the stock is overvalued
the remaining principal is recorded as what
long-term liability
bonds payable are what type of liability
longterm
Sales taxes
money collected from the customer for the governmental unit levying the tax.
example of a secured note
mortgage
earnings per share
net income - preferred dividends / weighted average common shares outstanding
long term liabilities
obligations to be paid after a year
notes/bonds
Debt instruments that require borrowers to pay the lender the face value and usually to make periodic interest payments
T/F: Companies with good business models cannot forced into bankruptcy by their inability to pay current liabilities.
False
Stated/Coupon/Contract Rate
Rate of interest paid on the face (or par) value. The borrower pays the interest to the creditor each period until maturity
stock options
Rights to buy stock at a set price - compensation for employees and executives
Unearned revenue
The liability created by receiving revenue in advance.
Debt to Equity
Total Liabilities / Total Equity
T/F: the amount reported on the balance sheet should not include interest that has not yet accrued.
True
When a company purchases treasury stock for $6,000 and then reissues it for $5,000, the difference of $1,000 is:
a decrease in stockholders' equity
Junk Bonds
a special type of high interest-rate bond that carries higher inherent risks
Note payable
a written promise to pay a creditor a certain amount in the future
liquidity
ability to meet its short-term obligations.
premium for issue price
above face value
face value, par value, principal amount
amount of money the borrower agrees to repay at maturity
Accrued liabilities
amounts owed that are not yet paid
Contingent liability
an existing uncertain situation that might result in a loss
bond interest rate are usually:
annual or semiannual
what is on the balance sheet?
assets, liabilities, stockholders equity
withholding and payroll taxes
businesses are required to withhold taxes from employees' earnings; standard withholdings include federal, state, and possibly city or county income taxes, as well as Social Security and Medicare. Employees may also have amounts withheld for such things as retirement accounts and health insurance.
What is the exchange for bonds?
cash today in exchange for promise to pay future interest and principle
The premium on bonds payable account is shown on the balance sheet as
contra asset
treasury stock is the only____
contra equity account
Both _____ and _____ are interested in a company's liquidity—that is, its ability to meet its short-term obligations.
creditors and investors
the principle due next period is recorded as what?
current liability
Unsecured/Debenture Bonds
debt that does not have collateral
what are long term notes payable recorded at?
face value
what are the two types of interest rates that long term notes payable have?
fixed or adjustable
Most liabilities are recognized in exchange for _____
goods and services or the borrowing of money.
bond interest payable is what type of liability
short term
interest rate can be called
stated rate, coupon rate
When a company purchases treasury stock, which of the following statements is true?
the cost of treasury stock reduces stockholders' equity
Maturity Date
the date when a bond will come due
Market/ Yield Rate
the market rate of interest demanded by creditors
leases
the transfer of the right to use real property for a specified period of time
T/F: A contingent liability is an obligation whose amount, timing, or recipient depends on future events
true
T/F: long term notes payable can be fixed or adjustable
true
