Accounting 2 Chapter 18 Review

All bonds representing the total amount of a loan.

Bonds generally have shorter terms and are for larger amounts than notes payable.

A bank loan agreement that provides immediate short-term access to cash.

Accounts Payable and short-term notes payable are examples of collateral.

Obtaining capital by borrowing money for a period of time.

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

A business that pays a dividend reduces its internal source of capital.

A corp. usually sells its bonds to a security dealer who sells the bonds to individual investors.

A value assigned to a share of stock.

Expenses that are not related to a business' normal operations.

Obtaining capital by issuing additional stock in a corporation.

Loan interest rates are often based on bond interest rates.

Unpaid dividends on preferred stock has to be paid before common stock dividends.

A portion of monthly payments on a note payable reduces the outstanding loan principal.

The creditor can take and sell collateral if a borrower is unable to repay the loan.

The payment of an operating expense necessary to earn revenue.

A line of credit does not have to be repaid as long as the business pays its monthly interest.

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

The ratio of interest and dividend payments to the proceeds from debt and equity financing.

Corporations are required to pay dividends to preferred stockholders.