TAILIEUCHUNG - Lecture Principles of financial accouting - Chapter 14: Long-term liabilities

After completing this chapter you should be able to: Explain the types and payment patterns of notes, compare bond financing with stock financing, assess debt features and their implications, compute the debt-to-equity ratio and explain its use. | Chapter 14 Long-Term Liabilities McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 14: Long-Term Liabilities Bond Financing Bonds do not affect owner control. Interest on bonds is tax deductible. Bonds can increase return on equity. Advantages Bonds require payment of both periodic interest and par value at maturity. Bonds can decrease return on equity. Disadvantages A1 There are three main advantages of issuing bonds instead of shares. 1. Bonds do not affect owner control. Equity financing reflects ownership in a company, whereas bond financing does not. A person who contributes $1,000 of a company’s $10,000 equity financing typically controls one-tenth of all owner decisions. A person who owns a $1,000, 11%, 20-year bond has no ownership right. 2. Interest on bonds is tax deductible. Bond interest payments are tax deductible for the issuer, but equity payments to owners are not. 3. Bonds can increase return on equity. A company that .

• Tài chính doanh nghiệp
• Accounting principles
• Fundamental accounting principles
• Lecture Fundamental accounting principles
• Long term liabilities
• Bond retirement
• Long term notes payable
• Accounting information systems
• Fundamental system principles
• Technology based accounting systems
• Accounting information
• Financial accounting
• Managerial accounting
• Managerial cost
• Reporting manufacturing activities
• Merchandising operations
• Accounting cycle
• Completing the accounting cycle
• Classified balance sheet
• Accounting for partnerships
• Partnership form of organization
• Basic partnership accounting