FINAL EXAM Definitions Flashcards
Amounts owed for products or services purchased on account
Accounts payable account
used to borrow cash or purchase asset and due within one year
Short-term notes payable
Business receives cash before services or products are provided to
customers.
Deferred (Unearned) revenue account
Amount of long-term debt principal payable within the next 12 months
CPLTD account
sales taxes collected from customers to be remitted periodically to the state and local
governments
Sales Tax Payable Account
An existing, uncertain situation that might result in a loss
Contingent liability account
Based on the matching principle, the company needs to record warranty expense in
the same accounting period as the sale.
Warranty Expense Account
Represents the liability account set up when warranty expense is recognized and is
used to account for warranty work performed in the future.
Warranty Payable Account
Formal debt instrument that obligates the borrower to repay a stated amount, referred to
as the principal or face amount, at a specified maturity date.
Bonds Payable Account
backed by collateral
Secured Bonds
Not backed by collateral
Unsecured bonds
bond issue matures in installments
Serial Bonds
bond issue matures on a single date.
Term Bonds
borrower can pay off bond early at a specified call price.
Callable Bonds
Lender can convert bonds into a specified number of shares of common stock.
Convertible Bonds
(rate on the face of the bond) the rate ‘stated’ in the bond contract
Start Rate
debt that matures in over 12 months.
Long-term debt
This type of a lease is like a rental.
Operating Leases
Occurs when a lessee buys an asset and borrows the money through a lease to pay for the asset.
Capital Leases
Amount of earnings the corporation has retained
Earned Capital
Corporation’s stock that is reacquired
Treasury Stock (contra equity account)
Basic form of stock issued by corporation
Common Stock Account
Arbitrary amount assigned to share of stock in the articles of incorporation.
Par Value of Stock
Represents the earnings retained in the corporation – earnings not paid out as
dividends to stockholders.
Retained Earnings Account
Distribution to the shareholders of a corporation usually based on earnings
Dividends Account
