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18 Cards in this Set
- Front
- Back
Merchandise inventory include: |
all goods that a company owns and holds for sale, regardless of where the goods are located when inventory is counted |
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The 3 inventory items: |
-goods in transit -goods on cosignment -goods damaged or obsolete |
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The understatement of the ending inventory balance cause: |
the cost of goods to be overstated and the net income to be understated |
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What is the purpose of internal control? |
Managers use policies and procedures to; -Protect assets -ensure reliable accounting -promote efficient operations -urge adherence to company policies |
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What are the principles of internal control? |
-establish responsibilities/dividing tasks -maintain adequate records -insure assets and bond key employees -separate recordkeeping from custody of assets -divide responsibility for related trasnactions -apply technological controls -perform regular and independent reviews |
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Define: Cash |
Currency, coins, amounts of deposit in bank accounts, checking accounts, and many savings accounts. -Also includes items such as customer checks, cashier's checks, certified checks, and money orders |
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Define: Cash Equivalents |
Short-term, highly liquid investments that are: (1) Readily convertible to a known cash amount (2) Close to maturity (due) date and not sensitive to interest rate changes |
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What is the purpose of the voucher system? |
A voucher system establishes procedures for: -verifying, approving, and recording obligations for eventual cash disbursements -issuing checks for payment of verified approved, and recorded obligations. |
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The process of the voucher system |
Sender-->Voucher-->Receiver Cashier-->Check-->Supplier Accounting-->Invoice Approval-->Cashier Receiving-->Receiving Report-->Accounting Supplier-->Invoice-->Accounting Purchasing-->Purchase Order-->Supplier Requesting-->Purchase Requisition-->Purchasing |
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What is the petty cash system? |
Small payments required in most companies for items such as postage, courier fees, minor repairs, and low-cost supplies. -from company cashier--> to petty cashier |
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What is a petty cash fund? |
a petty cash fund is used only for business expenses. -petty cash receipts with either no signature or a forged signature usually indicate misuse of petty cash. |
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What is the purpose of Bank Reconciliation? |
A bank reconciliation is prepared regularly to explain the difference between cash reported on the bank statement and the cash balance on company's books. |
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Lump Sum Asset Purchases |
The total cost of a combined purchase of land and building is separated on the basis of their relative market value. |
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Depreciation |
Depreciation is the process of allocating the cost of a plant asset to expense in the accounting periods benefiting from its use. |
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Disposals of Plant Assets |
If Cash received > Book Value, record a gain(credit) If Cash received < Book Value, record a loss(debit) If cash received = Book Value, no gain or loss |
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Intangible Assets |
-Assets not physical in nature -Useful life is often difficult to determine -Often provide exclusive rights or privileges -Usually acquired for operational use |
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Examples of Intangible Assets |
-patents, copyrights, leaseholds, leasehold improvements, franchises & licenses, goodwill, trademarks & trade names |
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Patents |
The exclusive right granted to its owner to manufacture and sell a patented item or use a process for 20 years. -A patent's cost is generally amortized, using the straight-line method, over its useful life, not to exceed 20 years. |