Accounting Final

Question 1

Bonds Payable

Answer 1

*Bonds payable are a form of long term debt. Bonds are issued by corporations, hospitals and governments. The issuer of bonds makes formal promises to pay interest and to pay the principal amount at a specific date many years in the future. Also known as bond indenture.

Question 2

Bonds at par

Answer 2

Face value of the bond, fixed price.

Question 3

Premium

Answer 3

The selling price of the bonds less the face amount.

Question 4

Discount

Answer 4

The face amount of the bonds less the selling price.

Question 5

Corporation

Answer 5

An independent legal entity owned by shareholder. The corporation, not shareholders, is held legally liable for the actions and debts the business comes across.
If I become a big company and want to expand overseas I will become a corporation since it is more beneficial.

Question 6

Common Stock

Answer 6

A form of corporate equity ownership.

Question 7

Issuance of Common Stock

Answer 7

A separate account is used for recording the amount of each class of stock issued to investors in a corporation.
Stock is often issued by a corporation at a price other than its par. The price at which stock is sold depends on a variety of factors.

Question 8

Process of Dividends

Answer 8

Three dates included in a dividend announcement:

1. date of declaration
2. date of record
3. date of payment

Question 9

Preferred Stock

Answer 9

Like common stock, preferred stock represents partial ownership in a company. Although preferred stock shareholders do not enjoy any of the voting rights of common stockholders. Preferred stock pays a fixed dividend that does not fluctuate. Main benefit to owning preferred stock is that you have a greater claim on a company’s assets. Preferred stockholders always receive dividends first and in an event that the company goes bankrupt, preferred stockholders get paid before common stockholders.