Chapter 10 Flashcards
(29 cards)
accrued liabilities
the responsibility to pay an expense that has built up over time
actuary
a statistician who performs calculations related to human lifespans. i.e. computing company liabilities for pensions and post-retirement benefits
amortization table
a schedule that indicates installment payments divided into interest payments and payment of principal
bankruptcy
legal status of a business that has no cash or immediately liquid assets. usually managed by the U.S. Bankruptcy Court.
bonds payable
long-term debt security that subdivides large amounts debts into manageable transferable $1000 dollar increments
capital lease
a lease contract with the intent of the lessee to eventually purchase the leased property. recorded as an asset
collateral
assets that have been marked to cover specific liabilities. can be seized if the borrower is unable to repay creditor
commitments
agreements to fulfill future transactions. they are not recorded as a liability since the transaction has not occurred yet, but they may be recorded in notes to the financial statement
convertible bond
bond that may be traded for a specific number of a company’s stock shares
debt service
combined cash required for repayment of both the principal and interest for a specific period
deferred income taxes
liability account to pay income taxes hat have been pushed back to a future years income tax return
estimated liabilities
liabilities that are known to exist but must be recorded as estimated amounts
junk bonds
bonds that involve a larger risk of default. they must pay higher than normal interest rates in order to look more attractive to investors
lessee
the tenant or person who pays to rent the leased property
lessor
the person who owns the leased property and leases it to someone else
leverage
when a company uses borrowed money to finance operations
loss contingency
situations where it is uncertain whether a loss will occur and a future event will resolve the uncertainty. i.e. lawsuits. disclosed in notes
maturity date
date which the liability becomes due
off-balance sheet financing
arrangement where resources are financed without obligation for future payments such as an operating lease
operating lease
basically a rental agreement. the lessor retains most of the risk and reward
payroll taxes
taxes imposed on an employer based on employee salary and wages. includes social security, medicare, unemployment taxes and workers comp.
pension fund
fund managed by independent trustee where the company makes periodic payments. used to make pension payments to retired employees
post retirement benefits
benefits payed to retired workers.
present value of future amount
amount of money an investor would pay today to receive a future amount based on rate of return
