Bond
A long-term promise to pay a specified amount on a specified date and to pay interest at stated intervals.
Bond Issue
All bonds representing the total amount of a loan.
Capital Expenditures
Purchases of plant assets used in the operation of a business.
Collateral
Assets pledged to a creditor to guarantee repayment of a loan.
Cost of Capital
The ratio of interest and dividend payments to the proceeds from debt and capital financing.
Debt Financing
Obtaining capital by borrowing money for a period of time.
Financial Leverage
The ability of a business to use borrowed funds to increase its earnings.
Interest Expense
Interest incurred on borrowed funds.
Line of Credit
A bank loan agreement that provides immediate short-term access to cash.
Non-Operating Expenses
Expenses that are not related to a business's normal operations.
Prime Interest Rate
The interest rate charged to a bank's most credit worthy customers.
Revenue Expenditure
The payment of an operating expense necessary to earn revenue.
Stated Interest Rate
The interest rate used to calculate periodic payments on a bond.
Beginning Inventory
The amount of inventory on hand at the beginning of a fiscal period.
Ending Inventory
The actual count of merchandise at the end of a fiscal period.
Depreciation
A loss in the usefulness of a plant asset as a result of wear or obsolescence.
Depreciation Expense
The portion of a plant asset's costs that is transferred to an expense account in each fiscal period during that asset's useful life.
Salvage Value
As estimate of the amount that will be received for an asset at the time of its disposal.
Current Assets
Cash and other assets expected to be exchanged for cash or consumed within a year.
Plant Assets
Physical assets that will be used for a number of years in the operations of a business.
Straight-Line Method of Depreciation
Recording an equal amount of depreciation expense for a plant asset in each year of its useful life
Accumulated Depreciation
The total amount of depreciation expense that has been recorded since the purchase of a plant asset.
Book Value of a Plant Asset
The original cost of a plant asset minus accumulated depreciation.
Aging of Accounts Receivable
Analyzing accounts receivable according to when they are due.
Allowance Method
Crediting the estimated value of uncollectible accounts to a contra account.
Book Value of Accounts Receivable
The difference between the balance of Accounts Receivable and its contra account, Allowance for Uncollectible Accounts.
Percent of Accounts Receivable Method
A method that uses an analysis of accounts receivable to estimate the amount that will be uncollectible.
Writing off an Account
Canceling the balance of a customer account because the customer does not pay.
Uncollectible Accounts
Accounts receivable that cannot be collected.
