chap 10 Flashcards Preview

Financial accounting > chap 10 > Flashcards

Flashcards in chap 10 Deck (27):
1

current liability

a debt expected to be paid from existing current assets or through the creation of other current liabilities AND it will be paid within one year or the operating cycle

2

notes payable

obligations in the form of written promissory notes.

3

sales tax payable

tax is a stated percentage of the sales price, collected from the customer and remitted to the state's department of revenue. company is a collection agent

4

unearned revenues

advance payments

5

current maturities of long-term debt

current portion of long term debts that are due within one year

6

formula: gross earnings

hours * pay rate

7

payroll deductions

FICA (retirement, employment disability, medical benefits), social security taces

8

income taxes

based on gross earning, allowances, claimed by the employee, and length of the pay period (w-4 form)

9

formula: net pay

gross earnings less payroll deductions

10

employer payroll taxes

taxes levied on employers by gov. (FICA, unemployment tax, etc)

11

filing and remitting payroll taxes

must be reported quarterly, no later than one month.

12

bond

a form of interest-bearing not payable issued by corporations, universities and governmental agencies

13

types of bonds

secured, unsecured, convertible, callable

14

secured bonds

bonds that have specific assets of the issuer pledged as collateral for the bonds

15

unsecured bonds

bonds issued against the general credit of the borrower

16

convertible bonds

bonds that can be converted into common stock at the bondholder's option

17

callable bonds

bonds that can be retired at a stated dollar amount prior to maturity

18

bond certificate

issued to the investor to provide evidence of the investor's claim against the company

19

face value

amount due at the maturity date

20

contractual interest rate

rate to determine the amount of cash interest the borrower pays and the investor receives

21

time value of money

indicated the relationship between time and money

22

present value

how much must be invest today at current interest rates a set sum in the future

23

discount is a _____ account

contra

24

formula: liquidity ratio

(total assets) = total liabilities / total assets

25

formula: solvency ratio

= (net income + interest expense + tax expense) / interest expense

26

contigencies

events with uncertain outcomes

27

leasing

operating (treat like a rental) and capital leases (capitalized)