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25 Cards in this Set
- Front
- Back
what are the limitations of internal control?
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-human element
-cost/ benefit analysis -collusion -size of business |
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type of internal control that involves prenumbering and prompt delivery of documents
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documentation procedures
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type of internal control that involves someone outside the system verifying the books periodically
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independent internal verification
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type of internal control that insures the business against misappropriation of an asset by dishonest employees
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bonding of employees
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type of internal control where the work of 1 employee should provide reliable basis for the work of another employee
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segregation of duties
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type of internal control where only 1 person is responsible for a given task
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establishment of responsibility
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what are the two ways to fix the bank's statement
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Add deposits in transit
subtract outstanding checks |
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what are the 3 ways to fix the book's statement
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add collection of notes receivable
subtract NSF check subtract bank service charge |
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what is the adjusting entry for collection of Notes Receivable
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debit cash
credit Notes receivable |
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what is the adjusting entry for NSF check
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debit Accounts Receivable
credit cash |
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what is the adjusting entry for bank service charge
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debit miscellaneous expense
credit cash |
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what is the entry for estimating uncollectible accounts
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debit bad debt expense
credit Allowance for Doubtful Accounts |
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what is the entry for the write off of an uncollectible account
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debit Allowance Doubtful accounts
credit Accounts Receivable |
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what is the cash realization value before and after write off
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before = Accounts receivable -allowance DA
after = Accounts receivable + allowance DA |
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what is the entry for a receivable that is deemed uncollectible?
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2 entries :
debit Accounts Receivable credit Allowance DA debit cash credit Accounts receivable |
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receivable turnover rate =
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net credit sales / average net receivables
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Average collection period =
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365/ receivable turnover ratio
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what is the entry to convert for Accounts receivable to notes receivable ?
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debit Notes Receivable
credit Accounts receivable |
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what is the entry for the sale of accounts receivable to a factor
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debit cash
debit service charge expense credit accounts receivable |
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what does the cost of land include? (5 things )
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1. cash purchase price
2. closing costs - title fees, attorney fees 3. brokers commissions 4. accrued property tax 5. all necessary costs in making land ready for use |
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what is involved in the cost of constructing a building? (5)
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1. contract price
2. architect's fees 3. building permits 4. excavation costs 5. interest costs during construction |
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book value =
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cost - accumulated depreciation
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what is the entry for the retirement of an asset?
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debit depreciation expense
credit accumulated depreciation |
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all favorable attributes that relate to a business enterprise including
-exceptional management - desirable location - good customer relations -skilled employees only recorded when entire business is purchased = excess of cost/ fair market value of net assets acquired |
goodwill
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what is the entry to record sales tax recorded by retailer
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debit cash
credit sales credit sales tax payable |