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Adv Account Chap 18
Vocab
Term | Definition |
---|---|
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. |