ACCT 3315 exam 1

face value

amount due at note’s maturity date

stated rate

interest rate used to determine the cash interest payments

market rate

interest rate on similar debt in the market involving similar risk and where the borrower has a similar credit rating

interest-bearing note

note requiring periodic cash interest payments based on terms of the note

noninterest-bearing note

note requiring no periodic cash interest payments; all amounts are paid at maturity

discount on note payable

contra account equal to excess of face value of a note over its present value; discount decreases carrying value of NP

premium on note payable

adjunct account equal to the excess of the present value fo a note over its face value; increases varrying value fo a NP

corporate bond

issued by private and public corps

municipal

issued by governmental entities

secured

supported by a lien on specific assets where bondholders have first cliam on the secured assets

debenture

backed only by issuer’s credit where bondholders are general creditors

term

mature (pays prin) on a single, specified date

serial

mature (pays prin) on several installment dates

callable(redeemable)

subject to early redemption at the option of the issuer

convertible

convertible to equity securities at the option of the bondholders

current asset ratio

current assets/current liabilities

quick ratio

cash + inv + rec/ current liab

times interest earned ratio

net earning before tax and interest/ interest exp