UCBUGBA102ATopic07PracticeQuestionsSolns - Topic07...

Info icon This preview shows pages 1–2. Sign up to view the full content.

Topic07 Long-Term Liabilities Question 1. In a short sentence, define the following terms: a. Secured Note Payable is a note where specific assets are pledged as collateral. b. Deferred Income Taxes Payable are tax obligations arising from timing differences between reporting revenue and expense items on the financial statements according to GAAP and reporting them on tax returns filed according to the internal revenue code. c. Convertible Bonds are bonds issued with the provision that the holder has the option to convert them to stock at some future date. d. Financial Leverage refers to the tendency of return on equity to increase faster than return on assets due to the use of outside debt. Positive financial leverage is achieved when the return on assets of the company is larger than the cost of debt. When the reverse is true, negative financial leverage results. e. Discounted Cash Flow Value is the process of adjusting a stream of future cash flows to their equivalent in today’s dollars based on an assumed earnings rate (opportunity cost). Question 2. In a short sentence, explain the difference between the following concepts:
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern