ch 10 terms

Question 1

three kinds of sales tax

Answer 1

GST federal
PST/QST provincial
HST harmonized

Question 2

hour-based pay

Answer 2

wage

Question 3

fixed kind of pay

Answer 3

salary

Question 4

difference between gross and net pay

Answer 4

gross total
net after tax and reductions

Question 5

what are employee payroll deductions

Answer 5

employee incurs expense and get less pay

Question 6

list mandatory employee reductions

Answer 6

CPP EI income tax

Question 7

list voluntary employee payroll deductions

Answer 7

benefits
union
donations

Question 8

what are employER payroll obligations

Answer 8

employer must pay expense when paying employee

Question 9

CPP employer obligation amount

Answer 9

match employee remit to govt

Question 10

EI employer payroll obligation

Answer 10

1.4x employee
remit to govt.

Question 11

3 kinds of employER obligations remitted to govt

Answer 11

CPP (1x)
EI (1.4x)
employee sponsored benefits (stats, vacation, pension)

Question 12

what employeER obligations are remitted to third party

Answer 12

health insurance, WCB

Question 13

define provision

Answer 13

uncertain timing/amount of payment for pre-existing obligation
ex. refund liability

Question 14

define contingent liability

Answer 14

unrecorded but disclosed item
ex. estimation of loss through class action lawsuits

Question 15

define line of credit

Answer 15

bank covers cheque firm writes when insufficient funds
pay back + interest

Question 16

define covenant

Answer 16

financial agreement to pay owed

Question 17

define collateral

Answer 17

assets pledged as security for debt payment

Question 18

define liquidity

Answer 18

short term ability to pay obligations and meet emergency needs

Question 19

define solvency

Answer 19

ability to meet long term obligations

Question 20

define EBIT

Answer 20

Earnings Before Income and Tax

Question 21

what is a bond

Answer 21

interest bearing long term notes payable
based on formal arrangement

Question 22

define bond indenture

Answer 22

formal agreement to pay back bond with regular payments
and a fixed payment at maturity

Question 23

define principal value

Answer 23

the maturity/face value of bond
how much borrower must pay back until maturity

Question 24

define coupon rate

Answer 24

% or amount that payer owed twice a year

Question 25

define bond premium

Answer 25

bond sold above value because interest rate buyers receive is higher than the markets rate

Question 26

define bond discount

Answer 26

bond bought cheaper than value because interest rate is lower than market rate

Question 27

three steps of bond subsequent measurement

Answer 27

record cash payment
remove from book value of bond payable
record gain or loss

Question 28

how to calculate difference between interest exp and interest paid

Answer 28

1. cash payment
2. interest
3. difference is amount that needs to amortized

Question 29

computing cash payment for bond

Answer 29

face amount x stated rate x 6/12

Question 30

computing interest payment for bond

Answer 30

book value (carrying amount) x market rate x 6/12

Question 31

bond de recognition JE

Answer 31

cash
bond payable