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Accounting > Chapter 8, 9, 10 Vocab > Flashcards

Chapter 8, 9, 10 Vocab Flashcards

1
Q

What is a retired bond?

A

Corporation repurchases its bonds from the bondholders

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2
Q

Corporation repurchases its bonds from the bondholders are called

A

Retired Bonds

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3
Q

What is default risk?

A

possibility company unable to pay bond’s face value and interest at due date

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4
Q

possibility company unable to pay bond’s face value and interest at due date?

A

Default Risk

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5
Q

When market rate = stated rate

A

bond issues at face value

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6
Q

when does bond issue at face value?

A

when market rate = stated rate

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7
Q

What is debt financing?

A

Borrowing money from creditors

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8
Q

Borrowing money from creditors is called?

A

Debt Financing

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9
Q

Equity Financing

A

Obtaining investments from stockholders (stockholder’s equity)

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10
Q

Obtaining investments from stockholders (stockholder’s equity) is called?

A

Equity Financing

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11
Q

Capital Structure

A

Mix of liabilities and stockholder’s equity in a business

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12
Q

Mix of liabilities and stockholder’s equity in a business

A

Capital Structure

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13
Q

Market Rate > Stated Rate

A

Discount Bond

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14
Q

Discount Bond happens when

A

Market Rate > Stated Rate

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15
Q

Stated Rate > Market Rate

A

Premium Bond

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16
Q

Premium Bond happens when

A

Stated Rate > Market Rate

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17
Q

Convertible Bonds

A

allows lenders to convert bond into a specified number of shares of common stock

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18
Q

allows lenders to convert bond into a specified number of shares of common stock

A

Convertible Bonds

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19
Q

Callable Bonds

A

Usually corporate bonds, redeemable and protects against future decreases in interest rate

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20
Q

Usually corporate bonds, redeemable and protects against future decreases in interest rate

A

Callable Bonds

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21
Q

Installment Payment

A

Interest and reduction of the outstanding loan balance (principle)

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22
Q

Interest and reduction of the outstanding loan balance (principle)

A

Installment Payment

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23
Q

early extinguishment of debt

A

when issuer retires debt of any type before its scheduled maturity date

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24
Q

when issuer retires debt of any type before its scheduled maturity date

A

early extinguishment of debt

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25
Q

Debt to equity Ratio

A

Total Liabilities / Stockholder’s Equity

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26
Q

Total Liabilities / Stockholder’s Equity

A

Debt to equity Ratio

27
Q

Times Interest earned Ratio formula

A

(Net income + Interest Expense + Tax Expense ) / Interest Expense

28
Q

(Net income + Interest Expense + Tax Expense ) / Interest Expense

A

Times Interest earned Ratio formula

29
Q

Ratio that compares interest expense with income available to pay those charges

A

Times Interest Earned Ratio

30
Q

Times Interest Earned Ratio

A

Ratio that compares interest expense with income available to pay those charges

31
Q

Types of Bonds?

A 
Debenture
Callable
Convertible 
Term
Serial
32
Q

Serial Bonds?

A

Maturity Date with installments

33
Q

Maturity Date with installments

A

Serial Bonds

34
Q

Term Bonds?

A

Issue that matures on a single date

35
Q

Issue that matures on a single date

A

Term Bonds?

36
Q

Debentures Bonds

A

Unsecured Bonds

37
Q

Unsecured Bonds

A

Debentures Bonds

38
Q

What are the advantages of a corporation

A

Limited Liability and ability to raise capital and transfer ownership

39
Q

What are the disadvantages of a corporation

A

Additional Taxes (double taxation) and more paperwork

40
Q

Additional Paid in Capital

A

A credit account for portion of cash offered after Par Value

41
Q

A credit account for portion of cash offered after Par Value

A

Additional Paid in Capital

42
Q

Accumulated Deficit

A

A debit balance in retained earning

43
Q

A debit balance in retained earning

A

Accumulated Deficit

44
Q

Declaration Date

A

Board of Directors declaring dividends to be paid, the day its officially a liability

45
Q

Board of Directors declaring dividends to be paid, the day its officially a liability

A

Declaration Date

46
Q

Property Dividends

A

Non cash asset distributed to stockholders

47
Q

Non cash asset distributed to stockholders

A

Property Dividends

48
Q

Stock Dividends

A

Distribution of additional stocks to shareholders

49
Q

Property Dividends

A

Stock Dividends

50
Q

Statement of stockholders equity

A

changes in the balance in each stockholders equity over a period of time

51
Q

changes in the balance in each stockholders equity over a period of time

A

Statement of stockholders equity

52
Q

Return On Equity Formula

A

Net Income / Average Stockholder’s equity

53
Q

Net Income / Average Stockholder’s equity = ?

A

Return On Equity

54
Q

What Return On Equity Measures?

A

Ability of company management to generate earnings from resources that owners provide

55
Q

Ability of company management to generate earnings from resources that owners provide is the measurement of?

A

Return On Equity

56
Q

Earnings Per Share formula

A

(net income - dividends on preferred stocks) / average share of common stocks outstanding

57
Q

(net income - dividends on preferred stocks) / average share of common stocks outstanding

A

Earnings Per Share Formula

58
Q

Price earning ratio and measures?

A

(Stock price / earnings per shares) : indicates how stock is trading relative to current earnings

59
Q

(Stock price / earnings per shares ): indicates how stock is trading relative to current earnings

A

Price earning ratio and measurement

60
Q

Growth Stocks

A

Stocks whose future earnings investors expect to be higher

61
Q

Stocks whose future earnings investors expect to be higher

A

Growth Stocks

62
Q

Value Stocks

A

stocks that are priced low in relation to current earnings

63
Q

stocks that are priced low in relation to current earnings

A

Value Stocks

Accounting (6 decks)

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