Chapter 12 Flashcards Preview

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Flashcards in Chapter 12 Deck (24):
1

Account that is directly related to another account. Have the same normal balance of related account and are added together on balance sheet

Adjunct Account

2

Details each loan payment's allocation between principal and interest and the beginning and ending loan balances

Amortization Schedule

3

Stream of equal cash payments made at equal time intervals

Annuity

4

Long-term debt issued to multiple lenders

Bond Payable

5

Issuer may call and pay off specified price whenever issuer wants

Callable Bonds

6

Bond Payable - Discount account current balance or + premium account current balance

Carrying Amount of Bonds

7

Interest calculated on the principal and on all previously earned interest

Compound Interest

8

Unsecured bonds backed only by the goodwill of the bond issuer

Debentures

9

Measures the proportion of total liabilities to total equity

Debt to Equity Ratio

10

Occurs when a bond's issue price is less than face value

Discount on Bonds Payable

11

Allocates an amount of bond discount or premium, based in the market interest rate at issuance, to each interest period over the life of the bond

Effective-Interest Amortization Method

12

Amount a borrower must payback to the bondholders on the maturity date

Face Value

13

Occurs when a company earns more income on borrowed money than the related interest expense

Leverage

14

Interest rate the investors demand in order to loan their money

Market Interest Rate

15

Long-term debt that is backed with a security interest in specific property

Mortgage Payable

16

Occurs when a bond's issue price is more than face value

Premium on Bonds Payable

17

Amount a person would invest now to receive a greater amount in the future

Present Value

18

Bonds that give the bondholders the right to take specified assets of the issuer if the issuer fails to pay principal or interest

Secured Bonds

19

Bonds that mature in installments at regular intervals

Serial Bonds

20

Interest calculated only on the principal amount

Simple Interest

21

Interest rate that determines that the amount of cash interest the borrower pays and the investor receives each year

Stated Interest Rate

22

Allocates an equal amount of bond discount or premium to each interest period over the life of the bond

Straight-Line Amortization

23

Bonds that all mature at the same time

Term Bonds

24

Recognition that money earns income over time

Time Value of Money