Corporate Finance and Accounting: Stocks, Securities, Leases, and the SEC Terms, Quizzes of Hospitality and Tourism

Download Corporate Finance and Accounting: Stocks, Securities, Leases, and the SEC Terms and more Quizzes Hospitality and Tourism in PDF only on Docsity! TERM 1 Common Stock DEFINITION 1 Common stock is a form of corporate equity ownership, a type of security. The terms "voting share" or "ordinary share" are also used frequently in other parts of the world; common stock being primarily used in the United States. TERM 2 Par value DEFINITION 2 Par value, in finance and accounting, means stated value or face value. From this come the expressions at par, over par (over par value) and under par (under par value). TERM 3 Book value DEFINITION 3 In accounting, book value or carrying value is the value of an asset according to its balance sheet account balance. TERM 4 Preliminary Prospectus DEFINITION 4 first draft of a prospectus; must be clearly marked to indicate that parts may be changed in the final prospectus; "because some portions of the cover page are printed in red ink a preliminary prospectus is sometimes called a red herring" TERM 5 Prospectus DEFINITION 5 a document describing the major features of a proposed literary work, project, business venture, etc., in enough detail so that prospective investors, participants, or buyers may evaluate it: Don't buy the new stock offering until you read the prospectus carefully. TERM 6 Capitalization DEFINITION 6 1. the act or process of capitalizing. 2. the authorized or outstanding stocks and bonds of a corporation. 3. Accounting. a. the total investment of the owner or owners in a business enterprise. b. the total corporate liability. c. the total arrived at after addition of liabilities. 4. conversion into stocks or bonds. 5.the act of computing the present value of future periodical payments. TERM 7 SEC DEFINITION 7 Securities and Exchange Commission: a board, consisting of five members, charged with regulating the public offer and sale of securities. TERM 8 Secondary Markets DEFINITION 8 The secondary market, is also called aftermarket, is the financial market in which previously issued financial instruments such as stock, bonds, options, and futures are bought and sold. TERM 9 Securities Act of 1933 DEFINITION 9 United States Congress enacted the Securities Act of 1933 (the 1933 Act, the Securities Act, the Truth in Securities Act, the Federal Securities Act, or the '33 Act, Pub. L. TERM 10 Securities Exchange Act of 1934 DEFINITION 10 The Securities Exchange Act of 1934 (also called the Exchange Act, '34 Act, or 1934 Act) (, codified at et seq.) is a law governing the secondary trading of securities (stocks, bonds, and debentures) in the United States of America. TERM 21 Financial Lease (capital lease) DEFINITION 21 long-term and generally noncancelable and in which the lessee assumes responsibility for executory costs for accounting purposes. Capital leases are capitalized as assets. TERM 22 Residual value DEFINITION 22 the estimated market value of the leased item at the end of the lease term TERM 23 Incremental borrowing rate DEFINITION 23 Rate of interest the lessee would have to pay if he or she financed the purchase of the leased item at the time the item is leased. TERM 24 Leveraged leases DEFINITION 24 A lease where the property leased is purchased by the lessor using a large proportion of debt to finance the purchase. TERM 25 closed-ended leases DEFINITION 25 A lease in which the lessee does not have the option to buy the leased property nor i the lessee required to but the leased property at the end of the lease term. TERM 26 Open-ended leases DEFINITION 26 A lease in which the lessee has the option to buy the leased property at the end of lease term at a specified price. Alternatively the lessee can purchase the property during the lease term at predetermined prices. TERM 27 Sale and leaseback DEFINITION 27 An arrangement in which the owner sells property and immediately leases it back from the purchaser TERM 28 Off balance sheet financing DEFINITION 28 A term used to describe operating leases because, unlike capital leases, operating leases do not appear on the balance sheet. TERM 29 Major Provisions of Lease contracts DEFINITION 29 Legal names and addresses Term of lease and when lease payment is due Use is limited to stated purpose of lease Renewal options Executory costs (who pays them) When acts of nature occur (payment/restoration time) Subleasing (does the lessor have to approve) What does default include Most leases are subordinated to mortgages Right of Lessor to inspect lessee's books TERM 30 Lease payment alternatives DEFINITION 30 Flat rental percentage of sales greater of fixed or percentage of sales base fixed price plus a percentage TERM 31 Flat rental DEFINITION 31 Pays the same amount every month TERM 32 Percentage of sales DEFINITION 32 Rental payment is a predetermined percentage of the sales revenue TERM 33 Greater of fixed or percentage of sales DEFINITION 33 Rental payment is either a predetermined amount or a percentage of sales, whichever one happens to be bigger TERM 34 Base fixed plus a percentage DEFINITION 34 Rental payment is a fixed base cost plus a certain percentage of sales TERM 35 FASB Rules DEFINITION 35 Title transfer provision Bargain purchase provision Economic life provision Value recovery provision