Chapter 14-15 Vocab Flashcards
Bearer Bond
A bond that is payable to the bearer or person who has physical possession of the bond
Bond
A long-term debt instrument issued by corporations to raise money from the public
Bond Certificate
The note given to bondholders
Bond indenture
The bond contract
Bond issue
A group of bonds
Callable bond
A bond that gives the company issuing the bond the right to buy it back before the maturity date at a specified price
Capital Lease
A lease in which a company acquires such a substantial interest in the leased property that, for all practical purposes, the lease company owns the asset
Carrying value of debt
Remaining liability on the pro forma balance sheet
Collateral
An asset of group of assets specifically named in a debt agreement to which the creditor has claim if the borrower fails to comply with the terms of the note.
Convertible bond
A bond feature that allows bondholders to exchange the bonds for common of preferred stock
Covenants
Restrictions that lenders place on the borrowing company to protect the lenders’ interest
Debenture bonds
Unsecured bonds; bonds with no specific assets pledged as collateral
Discount on a note
The excess of the face value of a note over its present value (cash proceeds)
Face rate on the note
Used to determine the cash interest the borrower pays
Holder of the note
The lender
Lease
An agreement to convey the use of a tangible asset from one party to another in return for rental payments
Lump-sum payment note
A debt instrument that contains a promise to pay a specific amount of money at the end of a specified period of time
Marker of the note
The borrower
Marker, or effective, interest rate
The actual interest rate changed on a note’s proceeds
Mortgage
A long-term note secured with real estate, such as land or buildings, as collateral
Mortgage bond
A bond that is secured with real estate
Operating lease
A rental agreement for a period of time substantially shorter than the economic life of the leased asset
Periodic payment and lump-sum note
A debt instrument that combines periodic payments and a final lump-sum payment.
Periodic payment note
A debt instrument that contains a promise to make a series of equal payments consisting of both interest and principal at equal time intervals over a specified time period
Premium on a note
The amount that the present value (cash proceeds) of a note exceed its face value
Proceeds of the note
The amount of cash raised from issuance of a note
Registered bonds
Bonds that are numbered and made payable in the name of the bondholder
Secured bond
A bond that has some part of the issuing corporation’s assets serving as security for the loan.
Serial bond
A bond issue hat has specified portions of the bond issue coming due periodically over the life of the bond issue
Subordinated bonds
Unsecured bonds whose rights to repayment are ranked after, or subordinated to, some other person or group of creditors
Unsecured bond
A bond that does not have any specific assets pledged as security against it’s repayment
Adjunct Account
An account that is added to another account balance to reveal its carrying value
Discount on Bonds Payable
A contra liability account that represents the difference between the face value and the carrying value of the bonds
Discount on Notes Payable
A contra liability account that represents the difference between the carrying value and the fae value if the note; exists when the face value is greater than the carrying value
Paid-in Capital from Treasury Stock
An account used to show the amount of additional capital generated from the reissue of treasury stock
Paid-in Capital in Excess of Par Value
An account used to reflect the difference between the net assets received and the par value of the stock issued
Premium on Bond Payable
An account that represents the difference between the face value and the carrying value of the bonds; exists when the face value is less than the carrying value
Stock Dividends Distributable
An account credited on the date of declaration of a stock dividend to show the par value of the shares the corporation will issue on the date of distribution
Face value of the note
The amount the borrower will repay the lender for principal
