STUDY FOR BUSINESS

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Amortization The steady exclusion of a liability, such as a mortgage, in regular payments over a precise period of time. Such payments must be enough to cover both principal and interest.

Sinking Fund: A fund into which a company positions aside money over time, in order to leave its preferred stock, bonds or debentures. A fund into which a company positions away money over time, in order to leave its preferred stock, bonds or debentures. In the case of bonds, incremental payments into the sinking fund can often the financial impact at maturity. sponsor prefer bonds and debentures backed by sinking funds because there is less risk of a default.

Bond: A bond is a fixed interest financial asset issued by governments, organizations, banks, public utilities and other large entities. Bonds pay the holder a fixed amount a particular end date. A discount bond gives the bearer only at the ending date, while a coupon bond pays the bearer a fixed amount above a specified interval (month, year, etc.) as well as paying a fixed amount at the end date.

Liability:  An obligation to pay an amount in money, goods, or services to another party. The balance sheet lists the liabilities. Also called debt. Compare asset. See also contingent liability, current liability.

Note Receivable: A debt unpaid from borrowers and indications by a written guarantee of payment. Note receivable, an entry on the asset side of several company balance sheets, specifies the dollar amount of loans due to be repaid by borrowers.

Mortgage Loan: A loan protected by the collateral of a number of particular real estate property which compel the borrower to make a prearranged series of payments.