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3 types of liabilities

known liabilities, estimated liabilities, contingent liabilities

payroll reports

form 941
form 940
w-2
w-4
payroll register
employee earnings report
withholidng tables

contingent liabilities

a potential obligation; future event that happens because of a past event; lawsuit; can either be estimates (record) or can't be estimated (disclose)

estimated liabilities

known obligation; uncertain amount; can be reasonably estimated

bond

written promise to pay loan later with interest; when issuing a bond, you are borrowing money

par value

aka face value; amount stated on the bond

maturity date

when bond is to be paid back

semiannual interest

interest rate on bonds every 6 months (usually twice a year)

bond indenture

agreement telling all details of how borrowing the money's going to work; identifies rights and responsibilities of the issuer(owner) and the bondholders; legal contracat between the issuer and bondholders

bond certificate

evidence of the company's debt; proof of bond ownership

oupon rate/contract rate

what the bond issuer pays for the bond interest rate

market rate

what a bond is normally paid at the moment

discount bonds

bond issuances below par value

premium on bonds

the amount by which the bond price exceeds the par value

unsecured bonds

built/loaned on credit worthiness of the institution

secured bonds

bonds with collateral; pledges specific assets of the issuer as collateral

term bonds

mature on same date

serial bonds

matures in a series of payments

sinking fund bond

maintains a separate account from which bondholders are paid at maturity; creates pools of money as you go to make a lot more over time

bearer bond

bonds easy to steal because they're unregistered; interest is paid to whoever possesses them

convertible bond

converts bonds to stock; can be changed for shares of the issuer's stock

callable bond

when company pays bills early to give up debtor

registered bond

people who keep up with their bonds

debenture

unsecured; backed only the issuer's credit standing

advantages of bonds

ownership doesn't change; interest is tax deductible; bonds can increase return on equity (ROE)

disadvantages of bonds

bonds can decrease return on equity (ROE); regular cash outlay for principal and interest

2 methods of amortize discount and premium bonds

1. effective interest method 2. straight-line method

bonds can have 2 different types of maturity dates:

1. term bonds 2. serial bonds

types of bonds

secured, unsecured, unregisted, registered, sinking fund, bearer, convertible, callable, serial, term, coupon

corporations

entity that is separate from its owners and has many of the same rights as a person

advantages of corporation

separate legal entity; limited liabilitiy; transferrable ownership rights; continuous life; no mutual agency for stockholders; easier capital accumulation

disadvantages of corporations

government regulation; corporate taxation

authorized shares

amount of shares allowed to put out

issued shares

number of shares ever sold

outstanding shares

shares issued and still held by stockholders

par value stock

stock that has a par value

no-par value stock

stock not assigned an amount

date of declaration

date the directors vote to declare and pay a dividend

date of record

date for identifying those stockholders to receive dividends

date of payment

date when the corporation makes payment

preferred stock rights

special rights that give it priority over common stock; gets dividends first (cumulative/non-cumulative); assets in liquidation after credit; does not vote

common stockholder rights

they can vote at stockholders' meetings; they can sell their stock; preemptive right to purchase; right to receive common dividends; share assets in liquidation

treasury stock

what the stock company's bought back; not an asset; doesn't receive dividends (cash or stock ones); doesn't have voting rightspr

prior period adjustment

corrections of material errors in past financial statements; reported in retained earnings; correct all years reporter

3 types of values stocks can have

par value/arbitrary value; no par value; stated value

3 types of dates dividends can have

date of declaration; date of record; date of payment

corporate structure (top to bottom)

stockholders; board of directors; mangement; employees

3 types of common shares

authorized shares; issued shares; outstanding shares

2 types of stock

preferred stock; treasury stock