Unit 9: Long-Term Liabilities and Stockholders' Equity
This unit addresses the two ways a company can raise funds: debt and equity. To finance long-term assets, companies issue long-term debt in the form of bonds. Equity is most often issued when companies begin operations to raise startup capital. If you want to learn more about debt and equity, you may be interested in BUS202: Principles of Finance.
Completing this unit should take you approximately 8 hours.
Upon successful completion of this unit, you will be able to:
- describe the difference between bonds and capital stock;
- describe par value, discount, and premium as they relate to bonds;
- explain how interest rates affect bond prices;
- account for bonds issued at par, a discount, or a premium;
- identify different types of capital stock and discuss differences between common stock and preferred stock;
- prepare a statement of shareholders' equity; and
- account for paid-in capital, cash dividends, stock dividends, stock splits, and retained earnings appropriations.
9.1: Long-Term Liabilities: Bonds
Read chapter 15, which introduces long-term bonds, their value, how they compare with stock. Some companies expand using stock, while some use debt (bonds). The example exercises refer to Appendix A, which you may find here.
This video explains the valuation of various bond types and discusses finding the market price of a bond.
9.2: Stockholders' Equity: Capital Stock
Read chapter 12, which details stockholders' equity, specifically capital stock. You learn about the different classes of stock, their characteristics, how capital appears on the Statement of Stockholders' Equity, and the steps for issuing stock to the public.
9.3: Stockholders' Equity: Corporations
Read chapter 13, which outlines the different sources of paid-in capital and how they are presented on the balance sheet. This chapter also covers treasury stock, dividends, stock splits, and price-per-share and price-per-earnings ratios.
Attempt this quiz, which covers the reporting of stockholders' equity on the balance sheet.
Unit 9 Assessment
Take this assessment to see how well you understood this unit.
- This assessment does not count towards your grade. It is just for practice!
- You will see the correct answers when you submit your answers. Use this to help you study for the final exam!
- You can take this assessment as many times as you want, whenever you want.