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ACCT-265 Final Review

Chapter 14: Current Liabilities
Chapter 15: Long-term Liabilities
Chapter 16: Shareholder's Equity: Contributed Capital
Chapter 17: Shareholder's Equity: Retained Earning

Chapter 14: Current Liabilities

Liabilities:

- Financial liabilities - Paid by assets
- Non-Financial liabilities - Paid by services
 
Notes payable

- Interest - bearing notes
- Non-interest - bearing notes (Discount = total interest, notes payable = P + I)

Refinancing

- Minimum amount can be refinanced
- Before financial statements issued

Payroll deductions

- Employer should match employee's CPP (1 time)
- Employer should match employee's EI (1.4 times)

Contingencies

- Likely happen
- Amount can be reasonable estimated ** entry for loss only

Premium, coupon, rebates

- Find out estimated liabilities

Compensated Absences

- Accrued in the year earning
- Used at current year earning


Chapter 15 Long - Term Liabilities

Issue bonds 

- Bonds issue at face value
- Bonds issue at discount

* Coupon interest rate is lower than effect interest rate

Bonds issue at premium

- Coupon interest rate is higher than effect interest rate

Bonds issue between interest date

- Received interest between last interest date to now and pay them on next interest date together.

 Intermediate Accounting - Received interest




Bonds issue cost

- The company's intangible assets.
- Amortize it over bonds' life using straight-line method.

Call back bonds

- Update amortization schedule.
- Calculate gain /loss

Discount, premium amortization

- Straight-line method
- Effective interest method


Chapter 16 Contributed Capital

Issue shares:

- Shares issue at par or stated value

- Shares issue at market value - (Usually happens with a contributed surplus)

- Shares issue at subscription basis - (‘Subscripted Common Shares' will increase shareholder's equity and ‘Subscripted Receivable' will decrease retained earnings.)

- Shares issue at ‘Lump Sum Sales' - (Looking for % of common shares and % of preferred shares)

 Preferred shares

- Cumulative preferred shares - (Dividend not paid in any year must be made up in a later year before any profit can be distributed to common shareholders)

- Participating preferred shares - (Holder of participating preferred shares share ratably with the common shareholders in any profit distribution beyond the prescribed rate)

- Convertible preferred shares - (The shareholders may, if they choose, exchange preferred shares for common shares.)


Chapter 17 Retained Earnings

Retained Earnings = Beginning R/E + Net Income - Dividend 

Dividends:

- Cash Dividends

- Property Dividends - (A property dividend is a nonreciprocal transfer of non-monetary assets between an enterprise and its owners.)

- Scrip Dividends - (Dividend payable in scrip - means that instead of paying the dividend now, the corporation has elected to pay it at some later date.)

- Stock Dividend

- Stock Split


Distinguish between stock dividends, stock splits and cash dividends

 Stock vs cash dividends and splits

 

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