ACTG 2011 Study Guide - Midterm Guide: Financial Statement, Aklavik, Effective Interest Rate

• School: York University
• Department: Accounting
• Course: ACTG 2011
• Professor: Laura Simeoni

Document Summary

Debt is amounts borrowed and owed by an entity. (can be non-current) Collateral is protection for the lenders incase borrower does not repay. Lenders get the collateral or the proceeds from its sales. Bond - a formal borrowing arrangement in which borrowers agree to pay periodic interest and pay off the principle. Debenture - a bond with no collateral (protection) provided to the lenders. Mortgage - a loan that provides the borrower"s property as collateral (protection) Note payable - a formal obligation signed by the borrower promising to repay. Entity can be financed through debt or equity > both have disadvantage and advantages. More riskier for entity as it can create problems if not payed back. Face value - the amount the lender will receive when bond matures. Maturity date - date in which the borrower will pay back. Coupon rate - percentage of the face value the issuer pays to investors each period.