Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Sml Biz ACCT/FIN F21 > Quiz 3 > Flashcards

Quiz 3 Flashcards

1
Q

whether banks will typically lend a venture 100% of the value of property put up as collateral

A

no, always less

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

sale-and-leaseback

A

venture sells asset to a financing company to receive cash then financing company leases asset to the venture

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

2 alt terms for sale-and-leaseback

A

sale/leaseback

leaseback

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

4 situations to use sale and leaseback

A
  • venture is facing foreclosure
  • you can only borrow at high interest rates due to bad credit
  • cash shortfall is projected and you need to conserve cash
  • banks wont let you borrow because of bad credit
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

fixed asset

A

land, buildings, equipment and other long-term (more than 1 year) assets, are also known as plant assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

foreclosure

A

lender takes possession of mortgaged property because borrow defaulted

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

loan covenant/agreement/promissory note

A

contract between borrower and lender that regulates promises made by each regarding financing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

debt service requirement

A

cash needed to pay interest plus principal in the specified period of time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

4 common loan covenants

A

maintain specified financial ratios
periodic delivery of financial statements to the lender
restrictions on additional borrowing
restrictions on distributions to owners as pay

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

P&I

A

principal and interest

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

5 advantages for the venture of entering into a leaseback, as discussed in class, including 3 that are advantages compared to a bank loan

A
  • provides cash up to 100% financing of asset value
  • allows continued use of the asset
  • bankadv-potentially cheaper financing than a bank loan (lower interest)
  • bankadv-lease payments may be smaller than debt service reqs
  • bankadv-usually no loan covenants
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

2 disadvantages for the venture of entering into a leaseback

A

the sale portion of a transaction may result in a taxable gain, causes cash outflow
-the venture gives up ownership of the asset

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

2 disadvantages of giving up ownership of the assets in a leaseback

A
  • no control over the property

- no opportunity to benefit from value appreciation (real estate)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

be able to explain which party (the venture, or the leasing/financing co.) is the:

     buyer

     seller

     lessee

     lessor
A

buyer - leasing company
seller - venture
lessee - venture
lessor - leasing company

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

factoring

A

selling a ventures A/R to a factor

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

alt term for factoring

A

receivables financing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

factor

A

a company that buys A/R at a discount

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

factor broker

A

connects factors with businesses seeking to sell their receivables for a commission

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

factoring with recourse

A

if a factored account is uncollectible, the venture must buy back that account

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

factoring without recourse

A

if a factored account is uncollectible, it is the factors loss usually

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

2 variables that impact the amount of the discount in factoring

A
  • whether the factoring is with or without recourse

- the creditworthiness of the A/R customers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

whether the discount is greater with factoring with recourse, or factoring without recourse

A

the discount is greater without recourse

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

whether factors prefer to buy business A/R, or consumer A/R

A

business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

2 advantages of factoring for the venture

A

provides immediate cash from the sale of A/R

improves cashflow by reducing collection time of A/R

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

disadvantage for the venture when factoring

A

commission means more costly than a bank loan

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

whether the business that factored the accounts, or the factor, is responsible for collecting the accounts

A

the factor is responsible for collecting

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

whether the risk of non-collection is borne by the the business that factored the accounts, or the factor, with factoring WITH recourse

A

factor with recourse means uncollected accounts goes back to business - business holds risk

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

whether the risk of non-collection is borne by the the business that factored the accounts, or the factor, with factoring WITHOUT recourse

A

factor without recourse means uncollected accounts are factors problem - factor holds risk

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

current liabilities + long-term debt equals

A

total liabilities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

basic accounting eqquation

A

A=L+OE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

balance sheet

A

reports the company’s assets, liabilities and owners’ equity as of a specified date

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

alt name for balance sheet

A

statement of financial condition/position

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

current assets

A

an asset expected to be converted to cash within one year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

non current asset

A

an asset expected to be converted to cash in greater than one year - has 2 sub categories

35
Q

current liability

A

a liability expected to be paid within one year

36
Q

non current liability

A

a liability expected to be paid in greater than one year

37
Q

consolidated financial statement

A

financial statements of a parent company and its subsidiaries

38
Q

parent company

A

a company that owns another

39
Q

subsidiary

A

a company owned by another company

40
Q

sister companies

A

companies that share a parent company

41
Q

accounts receivable

A

amounts due from customers for goods and services the co. has already provided

42
Q

alt name for allowance of doubtful account

A

estimated uncollectibles

43
Q

A/R net Formula

A

gross A/R - estimate of uncollectibles

44
Q

which is the total amount owed by customers to the company, gross A/R or A/R net

A

Gross A/R

45
Q

which is the amount the company actually expects to collect, gross A/R or A/R net

A

A/R net

46
Q

which is included in the company’s total assets, gross A/R or A/R net

A

A/R net

47
Q

alt name for fixed asset

A

PP&E property plant and equipment / plant asset

48
Q

whether preferred stock is listed before common stock on the balance sheet, or after

A

before

49
Q

whether fixed assets are current assets, or non-current assets

A

non-current

50
Q

which fixed asset is listed first

A

Land

51
Q

which fixed asset does not depreciate

A

land

52
Q

which indicates the total cost of the venture’s fixed assets, gross fixed assets or net fixed assets

A

historical cost/gross

53
Q

which is included in the venture’s total assets, gross fixed assets or net fixed assets

A

net fixed assets

54
Q

whether a fixed asset’s accumulated depreciation increases over time, or decreases

A

increases

55
Q

whether a fixed asset’s net book value increases over time, or decreases

A

decreases

56
Q

depreciation

A

spreading historical cost of a fixed asset over the assets estimated useful life

57
Q

accumulated depreciation

A

a fixed assets total depreciation from acquisition to the balance sheet date

58
Q

market value

A

price a buyer would pay to an unrelated seller

59
Q

[liabilities]

A

debt capital

60
Q

accrued payables

A

expenses that have been incurred but not yet paid

61
Q

3 examples of accrued payables

A

accrued wages/salaries
accrued interest
taxes payable

62
Q

owners’ equity

A

indicates the owners’ investment in the business

63
Q

contributed capital

A

out of pocket investments made by owners in exchange for a portion of ownership

64
Q

2 other terms for contributed capital

A

invested capital

paid-in capital

65
Q

retained earnings

A

reinvested profits

66
Q

another term for retained earnings

A

owners equity and retained earnings

accumulated earnings and reinvested profits

67
Q

dividend

A

a distribution of profits to the owners

68
Q

whether the book value of a fixed asset is the same as its market value

A

it is not the same

69
Q

what goodwill on the balance sheet indicates

A

indicates the co has acquired other companies

70
Q

the type of asset that goodwill is

A

noncurrent - intangible

71
Q

is par value same as market value

A

no

72
Q

who determines if corp will pay dividend

A

board of directors

73
Q

role of board of directors

A

deciding to pay dividends/to protect the interests of the shareholders

74
Q

formula for ending gross fixed assets

A

beg gross fixed + historical cost of fixed assets purchased - historical cost of assets sold in period

75
Q

net book value of a fixed asset

A

historical cost - accumulated depreciation

76
Q

amt reported on balance sheet for preferred stock

A

number of pref shares issued x par value per pref share

77
Q

amt reported on balance sheet for additional paid in capital preferred

A

anything contributed above preferred stock par value

78
Q

amt reported on balance sheet for common stock

A

number of common shares issued x par value per common share

79
Q

amt reported on balance sheet for additional paid in capital common

A

anything contributed above common stock par value

80
Q

ending retained earnings formula

A

beg retained earning + net income - dividends

81
Q

gross fixed assets

A

historical cost of all fixed assets

82
Q

par value

A

the amount shareholders receive at liquidation + divs/participation

83
Q

formula for total capital contribution

A

common/pref stock + additional paid in common/pref stock

Sml Biz ACCT/FIN F21 (10 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions