Details Title: ACC 305 Description: Final Vocab Total Flash Cards: 45 Created: 12/07/2008 12:51:24		New Users: To study from this flashcard set, or to create your own your own study flash cards, REGISTER HERE. Existing Users: CLICK HERE. Additional Accounting Flashcards
Cards in this set: Term Cumulative P/S Definition P/S on which missed dividends (arrears) must be paid prior to payment of a current dividend Term treasury stock Definition reacquired stock of a firm preferred stock Term capital lease Definition a financing arrangement involving real or personal property that gives the lessee all the rights and benefits of ownership of the underlying property (asset). Term liquidating dividend Definition dividend not based on R/E, 9 implies a reduction in both R/E and PIC Term Discount B/P Definition represents the increase in interest recognized over the term of a bond because the yield rate is greater than the coupon rate; also, the decrease in present value of a B/P relative to par@ issue due to the rate relationship Term debenture Definition unsecured (no collateral) B/P Term participating P/S Definition P/S paid a dividend at a rate greater than that stated on the certificate Term dilutive (EPS): Definition a convertible security which, if converted to C/S, would cause a drop in EPS Term preemptive right Definition right to maintain one’s ownership percentage in a firm before public sale of new C/S Term par value Definition legal capital; amount recorded in a given security account @ sale (such as C/S) Term operating lease Definition any lease not meeting the definition of a capital lease; no presumption of sale of the underlying asset to the lessee. Term fully diluted EPS Definition EPS, including in the weighted average number of shares all convertible securities which, if converted to C/S, would cause a drop in EPS. Term moral hazard Definition tendency of managers to overstate their performance (concentrate on indicators rather than economic measures of performance; post-hiring issue). Also, tendency of buyers to overuse items such as insurance Term adverse selection Definition : tendency of managers to overstate their credentials (misstatement of achievement; pre-hiring issue). Also, tendency of more reckless individuals to buy items such as insurance Term stock dividend Definition a dividend consisting of additional shares of the underlying stock. Can be either large or small. Term Stock split Definition A change in the number of outstanding shares by reissuing shares with new par values Term Dividend Definition a payment to owners (return) based on stock ownership Term Ex-dividend Definition Stock sold after the date of record are said to sold in this way (owner does not receive the dividend) Term Dividend-on Definition Stock before the date of record are said to sold in this way (owner receives the dividend and must pay the seller the dividend amount plus the sales price) Term limited liability Definition Creditors are limited in that the assets they can claim to settle obligations must be those of the entity – not those of owners or managers. The assets of the firm’s owners (or managers) are not those of the firm itself, and cannot be used to pay firm obligations. Term leverage Definition change in return due to use of debt financing (as opposed to stock financing) Term debt extinguishment Definition retirement of debt such as B/P Term arrears Definition missed (not yet paid) dividend Term premium B/P Definition adjunct account; represents the decrease in interest recognized over the term of a bond because the yield rate is less than the coupon rate; also, the increase in present value of a B/P over par@ issue due to the rate relationship. Term PV after pmt 1 Definition =(principal - pmt) - lease liability after int exp Term PV for premium bonds Definition = face value + ( premium b/p - premium b/p after interest) Term P/S Dividend Definition par value x % p/s outstanding Term EPS Definition =(NI - shrs sold @ par) ________________________ shares at C/S Term cash payout Definition = face amount x amount @ retirement Term Gain / Loss Definition = BV - payout Term leverage effect, need cash, cheaper than alternative, interest is tax deductible Definition reasons why a firm might issue bonds Term BV Old Definition = original cost- accum depreciation Term FMV New Definition = listed price - discounts Term Implied FMV Old Definition = FMV new - cash paid Term Implied gain/ loss ( similar asset exchange) Definition = FMV old - BV old Term Recorded value new Definition = BV old + cash paid for new Term ROA Definition = NI + iNT ( 1 - tax rate) / (avg TA) Term warranty expense estimate Definition = sales x rate Term decrease in cash Definition NI with no cash inflow Term increase in cash Definition NI with no cash outflow Term double declining method Definition = 2 / life ( cost- acc dep) Term straight line method Definition = 1 / life ( cost - salvage value) Term Free Cash Flow Definition = operating cash - ( capital acquisition + dividends) Term Quality of earnings Definition = operating cash / NI Term Quality earnings ratio > 1 Definition operating cash exceeds NI , operations are generating cash in general case