Accounting for liabilities

[blank_start]Discount on bonds payable[blank_end] is a contra-liability that is deducted from bonds payable on the balance sheet; it is the difference between the face value of the bond and its selling price when the selling price is less than the face (par) value.

[blank_start]Premium on bonds payable[blank_end] is an adjunct-liability that is added to bonds payable on the balance sheet; it is the difference between the face value of the bond and its selling price, when the selling price is more than the face (par) value.

[blank_start]Financial leverage[blank_end] is the use of borrowed funds to increase earnings.

[blank_start]Bonds issued at a discount[blank_end] are bonds issued for an amount less than the face value of the bond. This happens when the market rate of interest is greater than the bond´s stated rate of interest.

[blank_start]Proceeds[blank_end] are the amount of cash the bond issuer collects from the bondholders when the bonds are issued.

A [blank_start]bond[blank_end] is an interest-bearing, long-term note payable issued by corporations, universities, and governmental agencies.

[blank_start]Estimated liabilities[blank_end] are obligations that have some uncertainty in the amount, such as the cost to honor a warranty.

[blank_start]Bonds issued at a premium[blank_end] are bonds issued for an amount more than the face value of the bond. This happens when the market rate of interest is less than the bond´s stated rate of interest.

[blank_start]Capital structure[blank_end] is the combination of debt and equity that a firm uses to finance its business.

[blank_start]Amortization schedule[blank_end] is a chart that shows the amount of principal and the amount of interest that make up each payment of a loan.