Flashcards in Final Deck (32):

1

## Current Liability

### 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

2

## Notes payable

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

3

##
100,000 12% four month note payable

explain journal entry

###
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

4

## Sales tax payable

### taking a percentage of the sales price

5

##
Sales tax journal entry example

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

###
Cash debit 10,600

sales revenue credit 10,000

Sales tax payable credit 6,00

6

## Unearned revenue

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

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

###
Cash debit 500,000

Unearned ticket revenue credit 500,000

THEN

Unearned ticket revenue debit 100,000

Ticket revenue credit 100,000

8

## Payroll taxes

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

9

## Employer's share

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

10

## Journal entry for FICA taxes, federal taxes, state taxes

### record as payable and credit

11

## Bonds

### 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

12

## Secured bonds

### specific assets of the issuer pledged as collateral for the bonds

13

## unsecured bonds

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

14

## Convertible bonds

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

15

## Callable bonds

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

16

## Liquidity ratio definition

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

17

## Liquidity ratio equation

###
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

18

## Solvency Ratio

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

19

## solvency ratio equation

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

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

20

## Interest

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

21

## simple interest equation

### Principle x Rate x Time

22

## Compound interest

### 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

23

## compound interest formula

### FV= P x Future value table

24

## Annuities

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

25

## Future value of annuity

###
Sum of all payments (receipts) PLUS accumulated compound interest on them

Occurs when making payments every year

26

## Future value of annuity equation

### P x Future value annuity table amount

27

## Present value

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

28

## Present value of an annuity

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

making payments

29

## present value equation

### FV x present value table

30

## Present value of an annuity equation

### FV x preset value of an annuity table

31

## Semiannually

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

ex: semiannually for 3 years= 6 periods

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