Financial Accounting Study Guide
Financial Accounting Final Study Guide
Liabilities – Probable debts or obligations that result from past transactions
Current Liabilities – Are due within one year of the balance sheet date
Liquidity – The ability to pay current obligations
Working capital – Current assets minus current liabilities
Accrued Liabilities – Expenses that have been incurred but have not been paid at the end of the accounting period
Deferred Revenues – Revenues that have been collected but not yet earned, they are liabilities until the goods or services have been provided
Contingent Liability – A potential liability that has arisen as the result of a past event; it is not an effective liability until some future event occurs
Bonds – Publicly traded debt
Operating Lease – Does not meet any of the four criteria established by GAAP and does not cause the recording of an asset and liability
Capital Lease – Meets at least one of the four criteria established by GAAP and results in the recording of an asset and liability
Present Value – The current value of an amount to be received in the future; a future amount discounted for compound interest
Annuity – A series of periodic cash receipts or payments that are equal in amount each interest period
Bond Principal – The amount payable at the maturity of the bond and on which the periodic cash interest payments are computed
Par value/Face amount – Another name for bond principal, or the maturity amount of a bond
Stated rate- The rate of cash interest per period stated in the bond contract
Debenture – An unsecured bond; no assets are specifically pledged to guarantee repayment
Callable bond – may be converted to other securities of the issuer
Convertible bond – May be converted to other securities of the issuer (usually common stock)
Indenture – A bond contract that specifies the legal provisions of a bond issue
Secured bond – Specific assets are pledged as a guarantee of repayment at maturity
Bond certificate – The bond
Liabilities – Probable debts or obligations that result from past transactions
Current Liabilities – Are due within one year of the balance sheet date
Liquidity – The ability to pay current obligations
Working capital – Current assets minus current liabilities
Accrued Liabilities – Expenses that have been incurred but have not been paid at the end of the accounting period
Deferred Revenues – Revenues that have been collected but not yet earned, they are liabilities until the goods or services have been provided
Contingent Liability – A potential liability that has arisen as the result of a past event; it is not an effective liability until some future event occurs
Bonds – Publicly traded debt
Operating Lease – Does not meet any of the four criteria established by GAAP and does not cause the recording of an asset and liability
Capital Lease – Meets at least one of the four criteria established by GAAP and results in the recording of an asset and liability
Present Value – The current value of an amount to be received in the future; a future amount discounted for compound interest
Annuity – A series of periodic cash receipts or payments that are equal in amount each interest period
Bond Principal – The amount payable at the maturity of the bond and on which the periodic cash interest payments are computed
Par value/Face amount – Another name for bond principal, or the maturity amount of a bond
Stated rate- The rate of cash interest per period stated in the bond contract
Debenture – An unsecured bond; no assets are specifically pledged to guarantee repayment
Callable bond – may be converted to other securities of the issuer
Convertible bond – May be converted to other securities of the issuer (usually common stock)
Indenture – A bond contract that specifies the legal provisions of a bond issue
Secured bond – Specific assets are pledged as a guarantee of repayment at maturity
Bond certificate – The bond