Flashcards
Accounting 2 Chap 14
Cards in this deck (34)
- 1ConvenantsLenders may place restrictions on the borrowing company
- 2Maker of the Notethe borrower
- 3Holder of the Notethe lender
- 4Face Value of the Noteindicated the amount that the note's maker will ultimately pay the note holder
- 5Face Value on the Notethe amount of cash interest the maker will periodically pay the holder of the note
- 6Proceeds of the Noteamount of cash raised from the issuance of the debt
- 7Market, or effective, Interest Raethe actual interest rate charged for the use of the proceeds of the notes
- 8Carrying Value of Debtremaining liability on the pro forma balance sheet
- 9Long Term Debt Instruments-three types: Periodic Payment (installment) note, Lump-Sum Payment (Noninterest-Bearing) Note, and Periodic Payment and Lump-Sum Note
- 10Periodic Payment (Installment) Note-a debt instrument that contains a promise to make a series of equal payments (interest and principal) at equal time intervals over a specified time period
-present value of annunity - 11Lump-Sum Payment (Noninterest-Bearing) Note-debt instrument that contains a promise to pay a specific amount of money at the end of a specific time period
-only specifies face value and due date - 12Periodic Payment and Lump-Sum Note-combines periodic cash payments and a final lump-sum cash payment
-has face rate of interest and a face value that indicates that the maker promises to maker periodic cash interest payments and a lump-sum payment - 13Periodic Payment and Lump-Sum Note: Market Rate Greater than Face Rate-the proceeds of the note will be less than the face value of the note
-discount - 14Nonpublic Funding-occurs when a company enters into an agreement with a person or institution to borrow funds
-businesses: most common long-term debt - 15Collateral-an asset or group of assets specifically named in a debt agreement to which the creditor has claim if the borrower defaults
-ex: car loans - 16Mortgage-long term note that is secured with real estate, such as land or buildings, as collateral
- 17Lease-an agreement to convey the use of a tangible asset from one party to another in return for rental payments
-operating leases and capital leases - 18Operating Lease-rental agreement for a period of time that is substantially shorter than the economic life of the leased asset
- 19Capital Lease-a lease in which a company acquires such a substantial interest in the leased property that, for all practical purposes, the lessee company owns the asset
- 20Bonds-long term debt instruments issued by corporations to raise money from the public
-take the form of periodic payment and lump-sum notes - 21Bond Issue-consists of a group of $1,000 face value notes (bonds) with a specified face interest rate, often paid semiannually, that mature in 10 or more years
- 22Bond Certificate-a note given to bondholders
- 23Bond Indenture-bond contract
-specifies the amount of the bond issue, the life of the bond, the face value of each bond, and the face interest rate of the bond issue - 24Registered Bonds-numbered bonds and made payable in the name of the bondholder
- 25Bearer Bondsmade payable to the bearer or the person who has physical possession of the bond
- 26Callable Bondsa bond that gives the company issuing the bond the right to buy it back before the maturity date at a specified price
- 27Convertible Bondsallows bondholders to exchange their bonds for common or preferred stock
- 28Serial Bonda bond issue that has specified portions of then bond issue coming due periodically over the life of the bond issue
- 29Secured Bondsa bond that has some part of the issuing corporation's assets serving as security for the loan
- 30Mortgage Bondsecured bond backed up by a mortgage on the corporation's real estate
- 31Unsecured Bondsa bond that does not have specific assets pledged as security against their payment
- 32Debtenture Bondunsecured bonds
no specific assets pledged as collateral - 33Subordinated Bondunsecured bonds whose rights to repayment are ranked after some other person or group of creditors
- 34—
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- Flashcards on Accounting 2 Chap 14, created by megan.feret on 11/10/2015.
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