Ch#18 Accounting Review

The interest rate used to calculate periodic interest payments on a bond

• line of credit

• issue date

• stated interest rate

• bond

All bonds representing the total amount of a loan

• bond issue

• non-operating expenses

• prime interest rate

• debt financing

The interest rate charged to a bank's most creditworthy customers

• stated interest rate

• collateral

• prime interest rate

• equity financing

The ability of a business to use borrowed funds to increase its earnings.

• equity financing

• interest expense

• non-operating expenses

• financial leverage

The payment of an operating expense considered necessary to earn revenue

• revenue expenditure

• financial leverage

• par value

• collateral

Obtaining capital by borrowing money for a period of time.

• preferred stock

• bond issue

• debt financing

• cost of capital

A value assigned to a share of stock

• collateral

• preferred stock

• cost of capital

• par value

Purchase of a plant asset used in the operation of a business.

• Capital expenditure

• non-operating expense

• line of credit

• cost of capital

A long-term promise to pay a specified amount on a specified date and to pay interest at stated intervals (often semi-annually)

• bond

• bond issue

• capital expenditure

• collateral

Assets pledged to a creditor to guarantee repayment of a loan. The creditor has the ability to "sell" these items if the loan is not repaid.

• preferred stock

• collateral

• line of credit

• revenue expenditure