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B Chapter 8-2 - BChapter8 SourcesofCapital:Debt Liability:...

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B Chapter 8 Sources of Capital: Debt Liability : an obligation to an outside party  arising from a transaction or an event that  has already happened Some accounting liabilities are not legal  obligations (estimated warranty costs) Contingent Liability Liabilities  are a source of funds-AP allows  you to finance interest free and save cash Bonds (Debentures ): certificate promising  to pay its holder (1) a specified sum of  money at a stated date (maturity date), and 
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(2) interest at a stated rate until the maturity  date  Covenants Indenture Issue of Bonds : Par, premium, and  Discount Bond Interest Expense : bond interest +  amortization of premium or discount Bond Retirement Bring interest up-to-date Cancel Bond and premium or discount Leased Assets Operating lease
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Capital lease-Example p. 225 Other Liabilities: Current Liabilities Deferred Taxes
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