Unit 9: Long-Term Liabilities and Stockholders’ Equity
This unit addresses the two ways in which a company can raise funds: debt and equity. In order 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. In BUS202: Principles of Finance, you may learn more about the balance between debt and equity in a company.
Completing this unit should take you approximately 8 hours.
- Upon 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
  - Hermanson, Edwards, and Maher's Accounting Principles "Chapter 15: Long-term Financing: Bonds" File
    This reading introduces long term bonds, their value and their comparison with stock. Some companies expand using stock and some use debt (bonds) in this chapter you learn of the difference and what happens to the profits of an organization when they reward their investors.
    The example exercises in Chapter 15 refer to an appendix to the textbook, Appendix A, which is missing from this version of the textbook. You may find the values for the net present value factor in the tables presented in Financial Accounting, v.1.0: "Appendix: Present Value Tables" located here.
  - Matthew Shaw's "Valuing Long-term Bonds" Page
    This video explains valuation of various bond types. It discusses finding the market price of a bond. This is somewhat similar to content that you've read in Chapter 15 of the text but this video is very well delivered and sometimes seeing something in action is easier to understand than just reading about it.
- 9.2: Stockholders' Equity: Capital Stock
  - Hermanson, Edwards, and Maher's Accounting Principles: "Chapter 12: Stockholders' Equity: Classes of Capital Stock" File
    This reading details stockholders' equity, specifically Capital stock. You learn about the different classes of stock and their characteristics. Also covered is the presentation of capital on the Statement of Stockholders' Equity and the steps involved when issuing stock to the public
- 9.3: Stockholders' Equity: Corporations
  - Hermanson, Edwards, and Maher's Accounting Principles: "Chapter 13: Corporations: Paid-in Capital, Retained Earnings, Dividends, and Treasury Stock" File
    This chapter will outline in detail the different sources of paid-in capital and how it is presented on the balance sheet. Topics such as Treasury stock, dividends, stock splits, and price-per-share and price-per-earnings ratios are covered.
  - Boundless: "Reporting of Stockholders' Equity: Quiz"
    Attempt this quiz, which covers the reporting of stockholders' equity on the balance sheet.
- Unit 9 Assessment
  - Unit 9 Assessment Quiz
    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.

Unit 9: Long-Term Liabilities and Stockholders’ Equity