front 1 Current Liabilities | back 1 Obligations due to be paid or settled within one year or the company’s operating cycle, whichever is longer |
front 2 Purpose of Deductions from Gross Pay | back 2 Required under labor contracts |
front 3 Gross Pay | back 3 Total compensation an employee earns before deductions |
front 4 Interest on a note | back 4 Principal x Interest x Fraction of the Year the note is outstanding |
front 5 Estimated Liability | back 5 Obligation of an uncertain amount that can be reasonably estimated |
front 6 Examples of estimated liabilities | back 6 Health Benefits, Vacation Benefits, Bonus Plans, Warranties |
front 7 Contingent Liability | back 7 Obligation to make a future payment if, and only if, an uncertain future event occurs |
front 8 Probable and Reasonable | back 8 Record Liability |
front 9 Reasonabily possible | back 9 Disclose in Notes |
front 10 Future event is remote | back 10 No disclosure |
front 11 Short Term Notes Payable | back 11 A written promissory note to pay a specified amount on a stated future date within one year |
front 12 Note given to replace accounts payable | back 12 Accounts Payable Cash Notes Payable |
front 13 Journal Entry- sales tax on sales revenue | back 13 Cash Sales Sales Tax Payable Cost of Sales Inventory |
front 14 Bonds Payable | back 14 Written promise to pay the bond’s par (or face) value and interest at a stated contract rate; often issued in denominations of $1,000 |
front 15 Mortgages Payable | back 15 Legal loan agreement that protects a lender by giving the lender the right to be paid from the cash proceeds from the sale of a borrower’s assets identified in the mortgage |
front 16 Premium on Bond | back 16 Contract Rate > Market Rate |
front 17 Discount on Bond | back 17 Contract Rate < Market Rate |
front 18 Bonds Indenture | back 18 Contract between the bond issuer and the bondholders; identifies the parties’ rights and obligations |
front 19 Par value of bond | back 19 Amount the bond issuer agrees to pay at maturity and the amount on which cash interest payments are based; also called face amount or face value of a bond |
front 20 Bond Certificate | back 20 Document containing bond specifics such as issuer’s name, bond par value, contract interest rate, and maturity date |
front 21 Bond issuance | back 21 Sale of bonds, usually in the denominations of $1000 or $5000 |
front 22 Issuing a par value bond | back 22 Cash Bonds Payable |
front 23 Issuing discount bond | back 23 Cash Discount on Bonds Payable Bonds Payable |
front 24 Issuing premium bond | back 24 Cash Premium on Bonds Payable Bonds Payable |
front 25 Interest Payment on par value bond | back 25 Bonds interest expense Cash Principal x Rate x Time |
front 26 Interest payment on discounted bond | back 26 Bond interest expense Discount on Bonds Payable Cash |
front 27 Calculation of interest expense | back 27 Total bond interest expense / Number of interest periods |
front 28 Interest payment on premium bonds | back 28 Bond interest expense Premium on Bonds Payable Credit Cash |
front 29 Allocate discount (straight line method) | back 29
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front 30 Allocate premium (straight line method) | back 30
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front 31 Market Rate | back 31 Interest rate that borrowers are willing to pay and lenders are willing to accept for a specific lending agreement given the borrowers’ risk level |
front 32 Stated rate of interest | back 32 Interest rate specified in a bond indenture (or note); multiplied by the par value to determine the interest paid each period; also called coupon rate, stated rate, or nominal rate |
front 33 Advantages of corporations | back 33
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front 34 Disadvantages of corporations | back 34
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front 35 Common stock | back 35 Corporation’s basic ownership share; also generically called capital stock. |
front 36 Preferred stock | back 36 Stock with a priority status over common stockholders in one or more ways, such as paying dividends or distributing assets |
front 37 Cumulative | back 37 Preferred stock on which undeclared dividends accumulate until paid; common stockholders cannot receive dividends until cumulative dividends are paid |
front 38 Cash dividends | back 38 Corporation’s distribution of cash to its owners |
front 39 Stated value stock | back 39 No-par stock assigned a stated value per share; this amount is recorded in the stock account when the stock is issued |
front 40 Par value | back 40 Value assigned a share of stock by the corporate charter when the stock is authorized |
front 41 No-par value stock | back 41 Stock class that has not been assigned a par (or stated) value by the corporate charter |
front 42 Authorized stock | back 42 Total amount of stock that a corporation’s charter authorizes it to issue |
front 43 Treasury stock | back 43 Corporation’s own stock that it reacquired and still holds |
front 44 Rights of common shareholders | back 44
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front 45 Journal entry for issuing par value common stock | back 45 Cash Common Stock |
front 46 Journal entry for issuing par value stock at a premium | back 46 Cash Common Stock Paid in capital in excess of par value, c/s |
front 47 Journal entry for issuing no par value stock | back 47 Cash Common stock, no par value |
front 48 Journal entry for issuing stated value stock | back 48 Cash Common Stock Paid-in capital in excess of stated value, c/s |
front 49 Issuance of preferred stock | back 49 Cash Preferred stock Paid in capital in excess of par value, preferred stock |
front 50 Date of Declaration - Cash Dividend | back 50 Retained Earnings Common Dividend Payable |
front 51 Date of Payment - Cash Dividend | back 51 Common Dividend Payable Cash |
front 52 Operating activities | back 52 Transactions and events that affect net income
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front 53 Investing activities | back 53 Purchase and sales of long-term assets |
front 54 Financing activities | back 54 Transactions that affect long-term liabilities and equity |