Chapter 9 Flashcards
A form of debt that is expected to be paid within the longer of one year of the balance sheet date or one operating cycle. Examples include accounts payable, wages or salaries payable, unearned revenues, short-term notes payable, and the current portion of long-term debt.
CURRENT OR SHORT-TERM LIABILITIES
Forms of debt expected to be paid beyond one year of the balance sheet date or the next operating cycle, whichever is longer. Mortgages, long-term bank loans, and bonds payable are examples
LONG-TERM LIABILITIES
Liabilities where the payee, amount, and timing of payment are known. Examples include accounts payable, unearned revenues, and payroll liabilities.
KNOWN CURRENT LIABILITIES
The goods or services on which GST applies.
TAXABLE SUPPLIES
Sellers of taxable supplies
REGISTRANTS
The federal government body to which all taxes, including federal income tax, are remitted.
RECEIVER GENERAL FOR CANADA
Provincial sales tax paid by the final consumers of products.
PROVINCIAL SALES TAX
A combination of GST and PST that is used in some Canadian jurisdictions
HARMONIZED SALES TAX
A liability known to exist where the amount, although uncertain, can be estimated. Two common examples are warranties and income taxes.
ESTIMATED LIABILITY
An obligation incurred by the seller of a product or service to replace or repair defects
WARRANTY
A type of liability that exists when one of the following two criteria are satisfied: it is not probable, or it cannot be reliably estimated.
Is not recorded, rather it is disclosed in the notes to the financial statements except when there is a remote likelihood of its existence.
CONTINGENT LIABILITY
A debt instrument, generally issued to many investors, that requires future repayment of the original amount at a fixed date, as well as periodic interest payments during the intervening period.
BOND
A contract that is prepared between the corporation and the future bondholders. It specifies the terms with which the corporation will comply, such as how much interest will be paid and when.
BOND INDENTURE
A person appointed to be an intermediary between the corporation and the bondholder and administers the terms of the indenture.
TRUSTEE
Bonds are backed by physical assets of the corporation. These are usually long-lived assets.
SECURED BONDS
Bonds backed by real property that is legally pledged as security for the bonds,
MORTGAGE BONDS
A formal document stating that a company is liable to pay a specified amount with interest. The debt is not backed by any collateral. These bonds usually command a higher interest rate because of the added risk for investors.
DEBENTURES
Bonds that require the name and address of the owner to be recorded by the corporation or its trustee.
REGISTERED BONDS
Bonds that pass on the delivery of the bonds to new owners and is not tracked. Payment of interest is made when the bearer clips coupons attached to the bond and presents these for payment
BEARER BONDS
Bonds that have differing maturity dates, as indicated on the bond contract. Investors are able to choose bonds with a term that agrees with their investment plans.
SERIAL BONDS
The issue of bonds that permits the issuing corporation to redeem, or call, the bonds before their maturity date. The bond indenture usually indicates the price at which bonds are callable. Corporate bond issuers are thereby protected in the event that market interest rates decline below the bond contract interest rate. The higher interest rate bonds can be called to be replaced by bonds bearing a lower interest rate.
CALL PROVISION
Bonds that allow the bondholder to exchange bonds for a specified type and amount of the corporation’s share capital.
CONVERTIBLE BONDS
