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Accounting > Chapter 8, 9, 10 Vocab > Flashcards

Chapter 8, 9, 10 Vocab Flashcards

(63 cards)

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1
Q

What is a retired bond?

A

Corporation repurchases its bonds from the bondholders

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2
Q

Corporation repurchases its bonds from the bondholders are called

A

Retired Bonds

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3
Q

What is default risk?

A

possibility company unable to pay bond’s face value and interest at due date

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4
Q

possibility company unable to pay bond’s face value and interest at due date?

A

Default Risk

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5
Q

When market rate = stated rate

A

bond issues at face value

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6
Q

when does bond issue at face value?

A

when market rate = stated rate

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7
Q

What is debt financing?

A

Borrowing money from creditors

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8
Q

Borrowing money from creditors is called?

A

Debt Financing

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9
Q

Equity Financing

A

Obtaining investments from stockholders (stockholder’s equity)

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10
Q

Obtaining investments from stockholders (stockholder’s equity) is called?

A

Equity Financing

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11
Q

Capital Structure

A

Mix of liabilities and stockholder’s equity in a business

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12
Q

Mix of liabilities and stockholder’s equity in a business

A

Capital Structure

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13
Q

Market Rate > Stated Rate

A

Discount Bond

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14
Q

Discount Bond happens when

A

Market Rate > Stated Rate

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15
Q

Stated Rate > Market Rate

A

Premium Bond

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16
Q

Premium Bond happens when

A

Stated Rate > Market Rate

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17
Q

Convertible Bonds

A

allows lenders to convert bond into a specified number of shares of common stock

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18
Q

allows lenders to convert bond into a specified number of shares of common stock

A

Convertible Bonds

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19
Q

Callable Bonds

A

Usually corporate bonds, redeemable and protects against future decreases in interest rate

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20
Q

Usually corporate bonds, redeemable and protects against future decreases in interest rate

A

Callable Bonds

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21
Q

Installment Payment

A

Interest and reduction of the outstanding loan balance (principle)

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22
Q

Interest and reduction of the outstanding loan balance (principle)

A

Installment Payment

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23
Q

early extinguishment of debt

A

when issuer retires debt of any type before its scheduled maturity date

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24
Q

when issuer retires debt of any type before its scheduled maturity date

A

early extinguishment of debt

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25
Debt to equity Ratio
Total Liabilities / Stockholder's Equity
26
Total Liabilities / Stockholder's Equity
Debt to equity Ratio
27
Times Interest earned Ratio formula
(Net income + Interest Expense + Tax Expense ) / Interest Expense
28
(Net income + Interest Expense + Tax Expense ) / Interest Expense
Times Interest earned Ratio formula
29
Ratio that compares interest expense with income available to pay those charges
Times Interest Earned Ratio
30
Times Interest Earned Ratio
Ratio that compares interest expense with income available to pay those charges
31
Types of Bonds?
``` Debenture Callable Convertible Term Serial ```
32
Serial Bonds?
Maturity Date with installments
33
Maturity Date with installments
Serial Bonds
34
Term Bonds?
Issue that matures on a single date
35
Issue that matures on a single date
Term Bonds?
36
Debentures Bonds
Unsecured Bonds
37
Unsecured Bonds
Debentures Bonds
38
What are the advantages of a corporation
Limited Liability and ability to raise capital and transfer ownership
39
What are the disadvantages of a corporation
Additional Taxes (double taxation) and more paperwork
40
Additional Paid in Capital
A credit account for portion of cash offered after Par Value
41
A credit account for portion of cash offered after Par Value
Additional Paid in Capital
42
Accumulated Deficit
A debit balance in retained earning
43
A debit balance in retained earning
Accumulated Deficit
44
Declaration Date
Board of Directors declaring dividends to be paid, the day its officially a liability
45
Board of Directors declaring dividends to be paid, the day its officially a liability
Declaration Date
46
Property Dividends
Non cash asset distributed to stockholders
47
Non cash asset distributed to stockholders
Property Dividends
48
Stock Dividends
Distribution of additional stocks to shareholders
49
Property Dividends
Stock Dividends
50
Statement of stockholders equity
changes in the balance in each stockholders equity over a period of time
51
changes in the balance in each stockholders equity over a period of time
Statement of stockholders equity
52
Return On Equity Formula
Net Income / Average Stockholder's equity
53
Net Income / Average Stockholder's equity = ?
Return On Equity
54
What Return On Equity Measures?
Ability of company management to generate earnings from resources that owners provide
55
Ability of company management to generate earnings from resources that owners provide is the measurement of?
Return On Equity
56
Earnings Per Share formula
(net income - dividends on preferred stocks) / average share of common stocks outstanding
57
(net income - dividends on preferred stocks) / average share of common stocks outstanding
Earnings Per Share Formula
58
Price earning ratio and measures?
(Stock price / earnings per shares) : indicates how stock is trading relative to current earnings
59
(Stock price / earnings per shares ): indicates how stock is trading relative to current earnings
Price earning ratio and measurement
60
Growth Stocks
Stocks whose future earnings investors expect to be higher
61
Stocks whose future earnings investors expect to be higher
Growth Stocks
62
Value Stocks
stocks that are priced low in relation to current earnings
63
stocks that are priced low in relation to current earnings
Value Stocks

Accounting (6 decks)

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