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ac101_finalexmreview - Revised July 2008 EXAM REVIEW...

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Revised July 2008 Page 1 of 27 EXAM REVIEW ACCOUNTING 101 – UNIT IV – CHAPTERS 10, 11, 12 and COMPREHENSIVE FINAL EXAM STUDY SUGGESTIONS Review your class notes, homework exercises and problems. Be sure to review any chapter appendices assigned on the General Course Outline. Review Demonstration Problem, Summary and Key Terms at the end of each chapter. Answer the Multiple Choice Quiz at the end of each chapter. Answer Multiple Choice Quiz A and B on the textbook website www.mhhe.com/wild . Know accounting terms and concepts by answering the Discussion Questions at the end of each chapter. Know the account classification (i.e. asset, liability, or owner's equity) and normal balance of all accounts. Know what the financial ratios mean and how to calculate them. Other online help is available ay a variety of sites such as: http://www.cliffsnotes.com/WileyCDA/Section/id-305261.html http://www.simplestudies.com/ Chapter 10 – Accounting for Long-Term Liabilities Know the characteristics of a bond and various types of bonds. Understand the concept of present value and how to use the present value tables. Be able to compute the price that a buyer is willing to pay for a bond. Know the difference between a bond premium and discount and the effect on accounting for bonds payable. Discount: bond interest rate less than market/effective interest rate cash proceeds less than face amount of bonds annual interest expense will be greater than cash interest payments due to the amortization of the discount carrying value will be less than the face amount throughout the term of the bonds discount account always has a debit balance Premium: bond interest rate greater than market/effective interest rate cash proceeds greater than face amount of bonds annual interest expense will be less than cash interest payments due to the amortization of the discount carrying value will be greater than the face amount throughout the term of the bonds premium account always has a credit balance Be able to amortize a bond discount or premium and journalize the amortization.
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Revised July 2008 Page 2 of 27 Know what a sinking fund is and how it is used. Be able to journalize the redemption of bonds payable at par or at a premium or discount. Chapter 11 Accounting for Equity Understand the characteristics of a corporation. Be able to journalize entries for issuing stock at par or at a premium. Be able to journalize the entries for treasury stock transactions. Be able to journalize the entries for cash dividends and stock dividends. Cash dividends are paid in cash. To calculate the dollar value of the cash dividend, multiply the number of shares by the amount of the dividend declared per share. Stock dividends are paid in shares of stock. To determine the number of shares, multiply the number of shares outstanding by the stock dividend percentage. To calculate the dollar value of the stock dividend, multiply the number of shares by the market price.
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