Debt Financing Module 2

A set of flashcards covering key concepts from the Debt Financing module, focusing on definitions and financial impacts.

Mortgage

A special type of note payable secured by the pledging of certain assets, usually real estate.

Installment Payment

Regular payments made towards a loan, typically comprising both interest and principal reduction.

Interest Expense

The cost incurred by an entity for borrowed funds, recorded as an expense on the income statement.

Reduction of Principal

The amount by which the principal balance of a loan is decreased through payments.

Mortgage Payable

A liability account representing the amount owed on a mortgage loan.

Operating Cash Outflow

Cash used for operating activities, such as paying interest on loans.

Financing Cash Outflow

Cash used for financing activities, such as repayment of principal on loans.

Balance Sheet Impact

Changes in assets, liabilities, and equity as a result of financial transactions.

Income Statement Impact

The effect on revenues and expenses, ultimately impacting net income, from financial transactions.

Cash Flow Statement

A financial statement that provides aggregate data about all cash inflows and outflows.