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21 Cards in this Set
- Front
- Back
- 3rd side (hint)
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what are three main types of securities |
Equity securities debt securities derivative securities |
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what are two main types of equity securities |
common shares Preferred shares |
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Name three examples of debt securites |
bonds banknotes debenture bonds |
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name three examples of derivative securities |
forwards, options, swaps |
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what type of securities is non-convertible |
equity securities |
Equity securities represent a claim on the earnings and assets of a corporation, while debt securities are investments in debt instruments. For example, a stock is an equity security, while a bond is a debt security.equity securities don't have a known value amount |
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What two types of investments have readily determinable market values |
1) trading securities 2) securities available for sale |
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Identify two kinds of amortizations |
1) amortization of bond investment 2) amortization of bond payable |
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Amortization of bond investments is when you |
Purchase a bond |
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Amortization of bond payable is when you |
Sell a bond |
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What is the definition of fair value or market value of an asset |
The current selling price of an asset and the amount required to settle the liability |
The fair value or market value of an asset is considered exit value not entry value |
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What is the definition of the present value measurement basis |
The present value of a future cash flow is its discounted value |
Usually used for non current debt like bonds and long-term notes |
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Which two accounts reflect all measurement bases through revenue and expense recognition |
Retained earnings which also includes net income |
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Is a bond premium an adjunct or contra account |
Adjunct account |
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Is a bond discount an adjunct or contra account |
Contra account |
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Is an allowance for uncollectible accounts an adjunct or contra account |
Contra account |
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Is accumulated depreciation valuation account |
No |
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Is allowance for doubtful account evaluation account |
Yes |
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Is valuation allowance valuation account |
Yes |
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Are Bond premiums and discounts valuation accounts |
No |
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What are three ways ways to evaluate a firms worth on the balance sheet |
1) total net assets or total owners equity 2) market value of net identifiable assets (liquidation value) 3) total value of the firm (its market capitalization) |
2) market value of net identifiable assets (liquidation value) - the amount of cash that would remain after selling all identifiable assets and would require assets appraised
3) total value of the firm (its market capitalization) - total value of the firms outstanding stock |
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Equity is made up of with two different types of stocks |
1) common stock 2) preferred stock |
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