Term
|
Definition
| Bonds not registered in the name of the owner. |
|
|
Term
|
Definition
| A legal document that indicates the name of the issuer, the face value of the bonds, the contractual interest rate and maturity date of the bonds. |
|
|
Term
|
Definition
| A legal document that sets forth the terms of the bond issue. |
|
|
Term
|
Definition
| A form of interest-bearing notes payable issued by corporations, universities, and governmental entities. |
|
|
Term
|
Definition
| Bonds that are subject to retirement at a stated dollar amount prior to maturity at the option of the issuer. |
|
|
Term
|
Definition
| A contractual arrangement that transfers substantially all the benefits and risks of ownership to the lessee so that the lease is in effect a purchase of the property. |
|
|
Term
| Contractual interest rate |
|
Definition
| Rate used to determine the amount of cash interest the borrower pays and the investor receives |
|
|
Term
|
Definition
| Bonds that permit bondholders to convert them into common stock at the bondholders' option. |
|
|
Term
|
Definition
| Bonds issued against the general credit of the borrower. Also called unsecured bonds. |
|
|
Term
| Debt to total assets ratio |
|
Definition
| A solvency measure that indicates the percentage of total assets provided by creditors; computed as total debt divided by total assets. |
|
|
Term
|
Definition
| The difference between the face value of a bond and its selling price, when the bond is sold for less than its face value. |
|
|
Term
| Effective-interest method of amortization |
|
Definition
| A method of amortizing bond discount or bond premium that results in periodic interest expense equal to a constant percentage of the carrying value of the bonds. |
|
|
Term
|
Definition
| Amount of principal the issuer must pay at the maturity date of the bond. |
|
|
Term
|
Definition
| Obligations expected to be paid after one year. |
|
|
Term
|
Definition
| The rate investors demand for loaning funds to the corporation. |
|
|
Term
|
Definition
| A bond secured by real estate. |
|
|
Term
|
Definition
| A long-term note secured by a mortgage that pledges title to specific assets as security for a loan. |
|
|
Term
|
Definition
| A contractual arrangement giving the lessee temporary use of the property, with continued ownership of the property by the lessor. |
|
|
Term
|
Definition
| The difference between the selling price and the face value of a bond, when the bond is sold for more than its face value |
|
|
Term
|
Definition
| Bonds issued in the name of the owner |
|
|
Term
|
Definition
| Bonds that have specific assets of the issuer pledged as collateral |
|
|
Term
|
Definition
| Bonds that mature in installments. |
|
|
Term
|
Definition
| Bonds secured by specific assets set aside to retire them. |
|
|
Term
| Straight-line method of amortization |
|
Definition
| A method of amortizing bond discount or bond premium that results in allocating the same amount to interest expense in each interest period. |
|
|
Term
|
Definition
| Bonds that mature at a single specified future date. |
|
|
Term
| Times interest earned ratio |
|
Definition
| A solvency measure that indicates a company's ability to meet interest payments; computed by dividing income before income taxes and interest expense by interest expense. |
|
|
Term
|
Definition
| issued against the general credit of the borrower. Also called debenture bonds. |
|
|
Term
| Off-Balance-sheet financing |
|
Definition
| the practice of keeping liabilities off the balance sheet |
|
|
Term
|
Definition
|
|
Term
| times interst earned ratio |
|
Definition
| Income (before interst exp and income taxes) divided by Interest Exp |
|
|
Term
| A corporation issues $500,000, 10%, 5-year bonds on January 1, 2010 for $479,000. Interest is paid semiannually on January 1 and July 1. If the corporation uses the straight- line method of amortization of bond discount, the amount of bond interest expense to be recognized on July 1, 2010 is |
|
Definition
Bond expense 27100
Discount on Bonds payable 2100
Cash 25000 |
|
|
Term
T or F
Each bondholder may vote for the board of directors in proportion to the number of bonds held. |
|
Definition
|
|
Term
| If $800,000, 6% bonds are issued on January 1, and pay interest semiannually, the amount of interest paid on July 1 will be $24,000. |
|
Definition
|
|
Term
| If the market interest rate is greater than the contractual interest rate, bonds will sell at a discount. |
|
Definition
True
Market rate 25%
Contract rate 10% bond will be sold at a discount |
|
|
Term
| When bonds are sold at discount the bond expense will be Greater than the cash payment amount |
|
Definition
Bond Expense
Discount on Bond payable
Cash |
|
|
Term
| When the bond is sold at a premium the bond expense will be less then the Bond expense |
|
Definition
Bond Expense
Premium on Bond payable
Cash |
|
|
Term
| The loss on bond redemption is the difference between the cash paid and the carrying value of the bonds. |
|
Definition
|
|
Term
| A long-term note that pledges title to specific property as security for a loan is known as a mortgage payable. |
|
Definition
|
|
Term
| False- The carrying value of bonds is calculated by adding the balance of the Discount on Bonds Payable account to the balance in the Bonds Payable account. |
|
Definition
| The carrying value of a bond is calculated by adding or subtracting the premium or discount to the face of the bond. |
|
|
Term
| Which of the following is not an advantage of issuing bonds instead of common stock? |
|
Definition
A. Stockholder control is not affected.
B. Earnings per share on common stock may be lower. <--- (EPS may be higher)
C. Income to common shareholders may increase.
D. Tax savings result. (is advantage) |
|
|
Term
| A $600,000 bond was retired at 103 when the carrying value of the bond was $622,000. The entry to record the retirement would include a |
|
Definition
Bonds payable 600000
Discount on BDS pay 22000
Gain on bond redeem 4000
Cash 618000 |
|
|
Term
|
Definition
| the same whether bonds sell at a discount or a premium. |
|
|
Term
| A major disadvantage resulting from the use of bonds is that |
|
Definition
| interest must be paid on a periodic basis. |
|
|
Term
| Each of the following may be shown on a supporting schedule instead of on the balance sheet except the |
|
Definition
| current maturities of long-term debt. |
|
|
Term
| From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is that |
|
Definition
| interest must be paid on a periodic basis regardless of earnings. |
|
|
Term
| Gomez Corporation issues 2,000, 10-year, 8%, $1,000 bonds dated January 1, 2010, at 98. The journal entry to record the issuance will show a |
|
Definition
| debit to Cash for $1,960,000. |
|
|
