ACCOUNTING HESTON FINAL 8-10

Liability

Present obligation requiring future sacrifice of assets

Current Liabilities

Obligations due within one year or operating cycle

Contingent Liability

Potential obligation depending on future event

Accounts Payable

Liability from purchasing goods/services on credit

Accrued Liabilities

Expenses incurred but not yet paid

Unearned Revenue

Cash received before earning revenue

Bond

Long-term debt with interest payments and principal repayment

Face Value

Amount repaid at maturity

Stated Rate

Rate used to calculate cash interest payments

Market Rate

Rate investors demand that determines bond price

Premium

Bond sells above face value

Discount

Bond sells below face value

Carrying Value

Book value of bond (face ± premium/discount)

Common Stock

Ownership with voting rights

Preferred Stock

Priority in dividends, usually no voting rights

Retained Earnings

Accumulated income not paid as dividends

Treasury Stock

Company’s own stock that has been repurchased

Dividends

Distribution of retained earnings to shareholders

Stock Dividend

Additional shares given instead of cash

Stock Split

Increase in shares without changing equity

Earnings Per Share

Profit per share of common stock

Interest

Principal × Rate × (Months / 12)

Current Ratio

Current Assets / Current Liabilities

Quick Ratio

(Cash + Accounts Receivable + Short-term Investments) / Current Liabilities

Working Capital

Current Assets − Current Liabilities

Operating Cash Flow Ratio

Cash from Operations / Current Liabilities

Debt to Equity Ratio

Total Liabilities / Total Equity

Times Interest Earned

Operating Income / Interest Expense

Earnings Per Share (EPS)

(Net Income − Preferred Dividends) / Average Common Shares Outstanding

Dividend Yield

Dividends per Common Share / Market Price per Share

Additional Paid-In Capital (APIC)

Issue Price − Par Value