This term is often associated with an investment in the bonds issued by another corporation if the bonds are traded on a bond exchange.
This term is often associated with an investment in the bonds issued by another corporation if the bonds are traded on a bond exchange.
Investments in common stock, preferred stock, corporate bonds, or government bonds that can be readily sold on a stock or bond exchange. These investments are reported as a current asset if the investor’s intention...
The price at which the holder of a bond must sell the bond to the issuer. For example, a corporation may have the right to redeem/buy back its bonds by paying the bondholder 110% of the bond’s face amount.
What is the definition of capital market? Often, capital market refers to the structured market for trading stocks and bonds. Examples are the New York Stock Exchange, the American Stock Exchange, NASDAQ, and the New...
How is a voucher used in accounts payable? Definition of Voucher A voucher is often a prenumbered form used in the accounts payable department to standardize and enhance a company’s internal control over payments to...
This current liability account reports the amount a company’s employees have earned in holiday pay, vacation pay, and sick days but have not yet taken as of the date of the balance sheet.
The technique of recording accounts payable at the amount that will be paid after deducting any discount that is available for paying within the discount period. This has a theoretical advantage over the gross method...
This current liability account reports the amount a company owes the U.S. government as of the balance sheet date for the federal income taxes withheld from its employees’ salaries and wages.
This current liability account reports the amount a company owes the state governments as of the balance sheet date for the state income taxes withheld from its employees’ salaries and wages.
Is Accounts Payable a debit or a credit or both? Definition of an Accounts Payable Credit Since Accounts Payable is a liability account, it should have a credit balance. The credit balance indicates the amount that a...
A bond that is callable by the issuer at a certain price. The price and other conditions are disclosed in the bond’s indenture.
A document that discloses various conditions and terms of the company’s bonds. It would include the call price, collateral, ramifications if interest is not paid, etc.
A bond with collateral.
See debenture bond.
An unsecured bond. For example, a bond not secured by a lien on the issuer’s property.
A bond issued with a series (or staggering) of maturity dates.
The stated interest rate appearing on the face of the bond. Also referred to as the nominal rate or the stated interest rate.
See bearer bond.
The interest rate stated on a bond. This is also referred to as the face interest rate, nominal interest rate, and coupon rate.
What is a bond? There are several business definitions for bond. A bond could be a formal debt instrument issued by a corporation or government and purchased by investors. This is the meaning when we say that a public...
A restricted asset for the purpose of retiring a bond.
A bond (long-term debt) that is secured by a lien on real estate.
A bond (long term note) that can be exchanged by the holder for a specified number of shares of stock in the company. The convertibility feature usually allows for the bond to have a lower interest rate when it is...
A bearer bond is a bond that is not registered in its owner’s name. The person holding the bond is presumed to be the owner of the bond. The interest on a bearer bond is received by clipping one of the dated...
bonds. The result is that liabilities decrease and stockholders’ equity increases. 3) A corporation declares a cash dividend. A current liability Dividends Payable is created and the Retained Earnings (part of...
Payables arising from the purchase of merchandise inventory and outside services. See accounts payable.
The amount received from the sale of an asset, from the issuance of bonds or stock, or from a bank loan.
Taking out a loan or issuing bonds in order to acquire an asset or another business.
To eliminate debt such as a company’s repurchase or retirement of its outstanding bonds.
In securities, a party that assists a company in issuing stock or bonds.
To eliminate debt such as a company’s repurchase or retirement of its outstanding bonds.
Bonds and other debt securities that a company intends to hold until the securities mature. In addition to intent, the company must have the financial ability to be able to hold them until they mature.
A document that discloses important information on bonds or preferred stock. Included in the indenture would be the call price, the actions that can occur if the company fails to pay the interest or dividend, etc.
The amounts earned on money invested. Often this is interest and dividends earned on a company’s investment in stocks and bonds of other companies.
A stated legal amount often appearing on preferred stock, bonds, and some common stock.
Using debt (such as loans and bonds) to acquire more assets than would be possible by using only owners’ funds. Also referred to as trading on equity.
Long term assets that are not classified as investments, property, plant, equipment, or intangible assets. An example is bond issue costs that are amortized to expense over the life of the bonds.
A structured market for trading stocks and bonds such as the New York Stock Exchange or NASDAQ. Capital market can also include less structured markets such as private placements.
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