Chapter 7

Question 1

contingent liability

Answer 1

liability that depends on a fture event

Question 2

How to record

contingent liability: likely to resonably estimated amount

Answer 2

recognized on finanicial statement

Question 3

How to record

contingent liability: not likely or cannot be resonably estimated

Answer 3

given a footnote

Question 4

How to record

contingent liability: remote

Answer 4

dont record

Question 5

general uncertanties

Answer 5

things that arise from future events ( competition, damages ) not predictable

Question 6

line of credit

Answer 6

enables company to buy and repay funds as needed

Question 7

bond certificate

Answer 7

describes companies obligation to pay intrest and repay principal

Question 8

bondholder

Answer 8

person buying bond

Question 9

face value

Answer 9

amount that needs to be paid back at maturity

Question 10

bond discount formula

Answer 10

selling price- amount bond is sold for

Question 11

bond premium

Answer 11

when bond is sold for more then face value

Question 12

premium on bonds payable

Answer 12

lisbility account for bonds

Question 13

market rate of intrest

Answer 13

intrest rate investors accept

Question 14

collaterals

Answer 14

secruity for loan

Question 15

restrictive convenent

Answer 15

restrictions on person with loan as security for creditor

Question 16

operating cycle

Answer 16

cash- INV-A/R-cash

Question 17

long term renewable debt

Answer 17

when long term debt becomes current in final yr