TAILIEUCHUNG - Lecture Fundamental accounting principles (21e) - Chapter 14: Long-term liabilities

After completing this chapter you should be able to: Describe accounts receivable and how they occur and are recorded; describe a note receivable, the computation of its maturity date, and the recording of its existence; explain how receivables can be converted to cash before maturity. | Long-Term Liabilities Chapter 14 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 stock. 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 earns a higher return with borrowed funds than it pays in interest on those funds increases its return on equity. This process is called financial leverage or trading on the equity. On the other side of the issue, there are two main disadvantages to issuing bonds. 1. Bonds require payment of both periodic interest and the par value at maturity. Bond payments can be especially burdensome when income and cash flow are low. Equity financing, in contrast, does not require any payments because cash withdrawals (dividends) are paid at the discretion of the owner (or board of directors). 2. Bonds can decrease return on equity. When a company earns a lower return with the borrowed funds than it pays in interest, it decreases its return on equity. This downside risk of financial leverage is more likely to arise when a company has periods of low income or net losses. A company must weigh the risks and returns of the disadvantages and advantages of bond financing when deciding whether to issue bonds to finance operations. Bond Trading A1 Bonds are securities that can be purchased or sold

• Kế toán - Kiểm toán
• Accounting for receivables
• Notes receivable
• Disposal of receivables
• Accounting principles
• Fundamental accounting principles
• Lecture Fundamental accounting principles
• Survey of accounting
• Lecture Survey of accounting
• Accounting for cash
• Accounting cycle
• Inventory cost flow
• Uncollectible accounts
• Accounts receivable
• Lecture Accounting principles
• Financial reporting
• Statement presentation
• Nguyên lý kế toán
• Recognizing accounts receivable
• Managerial accounting
• Financial and managerial accounting
• Analyzing receivables
• Internal control
• Bank account
• Internal control activities
• Financial accounting
• Lecture Financial accounting
• Kế toán tài chính
• Lecture Principles of financial accounting
• Bài giảng Nguyên lý kế toán tài chính
• Receivable transactions
• Account for notes receivable
• Business decision
• Completing the accounting cycle
• Classified balance sheet
• Financial resources
• Accounting provides information
• Accounting for merchandising operations
• Merchandising operations
• The recording process
• Accounting information system
• Intermediate accounting
• Lecture Intermediate accounting
• Cash and receivables
• The different types
• Define receivables
• An international approach
• Accounting concepts
• Balance sheet
• Revenues and trade receivables
• Trade receivables
• Special issues
• Types of receivables
• Fundamental financial accounting
• Lecture Fundamental financial accounting concepts
• Financial statement
• Computing uncollectible accounts expense