Acct 3366- Ch. 5 And 6

Front 1

interest

Back 1

the excess cash received or repaid over and above the amount lent or borrowed

Front 2

principal

Back 2

the amount lent or borrowed

Front 3

simple interest

Back 3

the return (or growth on) the principal for one time period

Front 4

compound interest

Back 4

the return on (or growth of) the principal for two or more time periods. it computes interest on the principal and on the interest earned to date on that principal

Front 5

present value of 1 table

Back 5

contains the mounts that must be deposited now at a specified rate of interest to equal 1 at the end of a specified number of periods

Front 6

discounting

Back 6

reduces the amounts or values, so that the present value is less than the future amount

Front 7

present value

Back 7

amount needed to invest now, to produce a known future value

Front 8

future value of an annuity

Back 8

the sum of all the rents plus the accumulated compound interest on them

Front 9

annuity due

Back 9

when the rents occur at the beginning of the period

Front 10

[(1 + i)^n - 1]

Back 10

effective annual rate

Front 11

the pure rate of return + the expected inflation rate

Back 11

risk-free rate of return

Front 12

balance sheet

Back 12

statement of financial position

Front 13

liquidity

Back 13

the amount of time that is expected to elapse until an asset is realized or otherwise converted into cash or until a liability has to be paid

Front 14

solvency

Back 14

the ability of a company to pay its debts as they mature

Front 15

financial flexibility

Back 15

measures the ability of an enterprise to take effective actions to alter the amounts and timing of cash flows so it can respond to unexpected needs and opportunities

Front 16

assets

Back 16

probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events

Front 17

liabilities

Back 17

probable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events

Front 18

equity

Back 18

residual interest in the assets of an entity that remains after deducting its liabilities. In a business enterprise, it is the ownership interest

Front 19

current assets

Back 19

cash and other assets a company expects to convert into cash, sell, or consume either in one year or in the operating cycle ,whichever is longer

Front 20

cash equivalents

Back 20

short term, highly liquid investments that will mature within three months or less

Front 21

held-to-maturity

Back 21

debt securities that a company has the positive intent and ability to hold to maturity

Front 22

trading

Back 22

debt and equity securities bought and held primarily for sale in the near term to generate income on short-term price differences

Front 23

available-for-sale

Back 23

debt and equity securities not classified as held-to-maturity or trading securities

Front 24

property, plant, and equipment

Back 24

tangible long-lived assets used in the regular operations of the business

Front 25

intangible assets

Back 25

lack physical substance and are not financial instruments

Front 26

working capital

Back 26

the excess of total current assets over total current liabilities

Front 27

capital stock

Back 27

the par or stated value of the shares issued

Front 28

additional paid-in capital

Back 28

the excess of amounts paid in over the par or stated value

Front 29

retained earnings

Back 29

the corporation's undistributed earnings

Front 30

account form

Back 30

lists assets, by sections, on the left side, and liabilities and stockholders' equity, by sections, on the right side

Front 31

report form

Back 31

lists the sections one above the other on the same page

Front 32

contingencies

Back 32

material events that have an uncertain outcome

Front 33

accounting policies

Back 33

explanations of the valuation methods used or the basic assumptions made concerning inventory valuations, depreciation methods, investments in subsidiaries, etc.

Front 34

contractual situations

Back 34

explanations of certain restrictions or covenants attached to specific assets or, more likely, to liabilities

Front 35

fair values

Back 35

disclosures of fair values, particularly for financial instruments

Front 36

financial instruments

Back 36

cash, an ownership interest, or a contractual right to receive or obligation to deliver cash or another financial instrument

Front 37

reserve

Back 37

an appropriation of retained earnings

Front 38

operating activities

Back 38

involve the cash effects of transactions that enter into the determination of net income

Front 39

investing activities

Back 39

include making and collecting loan and acquiring and disposing of investments (both debt and equity) and property, plant, and equipment

Front 40

financing activity

Back 40

involve liability and owners' equity items. they include
1. obtaining resources from owners and providing them with a return on their investments
2. borrowing money from creditors and repaying the amounts borrowed

Front 41

current cash debt coverage ratio

Back 41

net cash provided by operating activities / average current liabilities

Front 42

cash debt coverage ratio

Back 42

net cash provided by operating activities / average total liabilities

Front 43

free cash flow

Back 43

-the amount of discretionary cash flow a company has.
= net cash provided by operating activities - capital expenditures - dividends