Details Title: Accounting II Description: Chapter 15 Total Flash Cards: 15 Created: 02/05/2008 16:22:55		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 Annuity Definition A series of equal cash flows at fixed intervals. 655 Term Bond Definition A form of an interest-bearing note used by corporations to borrow on a long-term basis. 650 Term Bond indenture Definition The contract between a corporation issuing bonds and the bondholders. 652 Term Carrying amount Definition The balance of the bonds payable account (face amount of the bonds) less any unamortized discount or plus any unamortized premium. 662 Term Contract rate Definition The periodic interest to be paid on the bonds that is identified in the bond indenture; expressed as a percentage of the face amount of the bond. 653 Term Discount Definition The interest deducted from the maturity value of a note or the excess of the face amount of bonds over their issue price. 574, 653 Term Effective interest rate method Definition The method of amortizing discounts and premiums that provides for a constant rate of interest on the carrying amount of the bonds at the beginning of each period; often called simply the "interest method." 659 Term Effective rate of interest Definition The market rate of interest at the time bonds are issued. 653 Term Future value Definition The estimated worth in the future of an amount of cash on hand today invested at a fixed rate of interest. 653 Term Held-to-maturity securities Definition Investments in bonds or other debt securities that mangement intends to hold to their maturity. 666 Term Number of times interest charges are earned Definition A ratio that measures creditor margin of safety for interest payments, calculated as income before interest and taxes divided by interest expense. 668 Term Premium Definition The excess of the issue price of a stock over its par value or the excess of the issue price of bonds over their face amount. 574, 653 Term Present value Definition The estimated worth today of an amount of cash to be received (or paid) in the future. 653 Term Present value of an annuity Definition The sum of the present values of a series of equal cash flows to be received at fixed intervals. 655 Term Sinking fund Definition A fund in which cash or assets are set aside for the purpose of payuing the face amount of the bonds at maturity. 662