Ch 10 flashcards

Current Liability

A creditor’s claim on total assets that a company expects to pay from existing current assets or through the creation of other current liabilities, and within one year or the operating cycle, whichever is longer.

Notes Payable

Obligations in the form of written notes, frequently issued to meet short-term financing needs, usually requiring the borrower to pay interest.

Accrued Liabilities

Liabilities that accumulate with the passage of time, such as taxes, salaries, and wages, which are owed at the financial statement date.

Unearned Revenue

Liabilities that occur when cash is received before goods are delivered or services are performed, creating a performance obligation.

Bond

A long-term liability that represents an obligation that is expected to be paid after one year, typically in the form of interest-bearing notes.

Secured Bonds

Bonds that are backed by specific assets of the issuer, which act as collateral for the bond.

Convertible Bonds

Bonds that can be converted into a specified number of shares of common stock at the bondholder's option.

Callable Bonds

Bonds that can be redeemed by the issuing company at a specified dollar amount prior to maturity.

Market Rate of Interest

The rate investors demand for loaning funds, which usually differs from the contractual interest rate of the bond.

Debt to Assets Ratio

A measure of a company’s solvency that indicates the extent to which a company’s assets are financed with debt.

Times Interest Earned

A solvency ratio that indicates a company’s ability to meet interest payments as they come due.

Mortgage Note

A long-term note payable secured by specific assets, usually real estate, and requiring installment payments over a period.