Final

Question 1

Current Liability

Answer 1

debt that a company reasonably expects to pay 1. from existing current asset or through the creation other current liabilities and 2. within one year or operating cycle

Question 2

Notes payable

Answer 2

companies record obligations in the form of promissory notes and usually require the borrower to pay interest.

Question 3

100,000 12% four month note payable

explain journal entry

Answer 3

debit cash for 100,000
Credit notes payable 100,000
THEN...
Interest expense (debit) 4,000
Interest payable (credit) 4,000
THEN... pay value of note plus interest 
Notes payable (debit) 100,000
Interest payable (debit) 4,000
Cash (credit) 104,000

Question 4

Sales tax payable

Answer 4

taking a percentage of the sales price

Question 5

Sales tax journal entry example

10,000 sales and sales tax of 600 (sales tax rate of 6%)

Answer 5

Cash debit 10,600
sales revenue credit 10,000
Sales tax payable credit 6,00

Question 6

Unearned revenue

Answer 6

receive payment for service or good that has not yet been deceived or preformed

Question 7

Unearned revenue example
sells 100,000 season football tickets at $50 each for its five-game home schedule
THEN after 1 game is completed

Answer 7

Cash debit 500,000
Unearned ticket revenue credit 500,000
THEN
Unearned ticket revenue debit 100,000
Ticket revenue credit 100,000

Question 8

Payroll taxes

Answer 8

Taxes imposed on employers or employees, and are usually calculated as a percentage of the salaries that employers pay their staff

Question 9

Employer’s share

Answer 9

Payroll taxes that goes to Social Security (FICA) taxes and state and federal unemployment taxes.

Question 10

Journal entry for FICA taxes, federal taxes, state taxes

Answer 10

record as payable and credit

Question 11

Bonds

Answer 11

A bond is a fixed obligation to pay that is issued by a corporation or government entity to investors. Bonds are used to raise cash for operational or infrastructure projects. Bonds usually include a periodic coupon payment, and are paid off as of a specific maturity date

Question 12

Secured bonds

Answer 12

specific assets of the issuer pledged as collateral for the bonds

Question 13

unsecured bonds

Answer 13

issued against the general creed of the borrower. Large corporations with good credit ratings use unsecured bonds extensively.

Question 14

Convertible bonds

Answer 14

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

Question 15

Callable bonds

Answer 15

Bonds that the issuing company can redeem (buy back) at the stated dollar amount prior to maturity

Question 16

Liquidity ratio definition

Answer 16

measure the short-term ability of a company to pay its maturing obligations and to meet unexpected needs for cash

Question 17

Liquidity ratio equation

Answer 17

Find current ratio then compare that to :1
(current assets)/(current liabilities) :1
current assets : what they owe
CA exceed CL=positive
CL exceed CA= negative

Question 18

Solvency Ratio

Answer 18

measure the ability of a company to survive over a long period of time

Question 19

solvency ratio equation

Answer 19

debt to assets ratio=(total liabilities/total assets)

Times interested Earned=(Net income + interest expense + tax expense) / interest expense

Question 20

Interest

Answer 20

Payment for the use of another persons money. it is the difference between amount borrowed and the amount repaid or collected

Question 21

simple interest equation

Answer 21

Principle x Rate x Time

Question 22

Compound interest

Answer 22

computed on principal and on any interest earned that has not been paid or withdrawn Occurs when you put in a lump sum of money

Question 23

compound interest formula

Answer 23

FV= P x Future value table

Question 24

Annuities

Answer 24

Series of equal dollar amounts are to be paid or received at evenly spaced time intervals

Question 25

Future value of annuity

Answer 25

Sum of all payments (receipts) PLUS accumulated compound interest on them
Occurs when making payments every year

Question 26

Future value of annuity equation

Answer 26

P x Future value annuity table amount

Question 27

Present value

Answer 27

The value NOW of a given amount to be paid or received in the future, assuming compound interest

Question 28

Present value of an annuity

Answer 28

The value NOW of a series of future receipts or payments, discounted assuming compound interest
making payments

Question 29

present value equation

Answer 29

FV x present value table

Question 30

Present value of an annuity equation

Answer 30

FV x preset value of an annuity table

Question 31

Semiannually

Answer 31

half the year—multiply # of years given by two.

ex: semiannually for 3 years= 6 periods

Question 32

PRESENT VALUE OF LONG TERM NOTE OR BOND???

Answer 32

ASK