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37 Cards in this Set

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Organizational plan and related measures adopted by an entity to safeguard assets, encourage adherence to company policies, promote operational efficiency, and ensure accurate and relaibale accounting records
Internal Control
The chief accounting officer of a business
Controller
A periodic examination of a company's financial statements and the accounting systems, controls, and records that produce them.
Audit
Document instructing a bank to pay the designated person or business the specified amount of money
Check
Document showing the beginning and ending balances of a particular bank account listing the month's transactions that affected the account
Bank Statement
System that transfers cash by electronic communication rather than by paper documents
Electronic fund transfer (EFT)
A document explaining the reasons for the difference between a depositior's records and the bank's records aboout the depositor's cash
Bank Reconciliation
A deposit recorded by the company but not yet by its bank
Deposit in Transit
A check issued by the company and recorded on its books but not yet paid by its bank
Outstanding Check
Collection of money by the bank on behalf of a depositor
Bank Collection
A "hot" check, one for which the payers bank account has insufficient money to pay the check. NSF checks are cash receipts that turn out to be worthless
Nonsufficient Funds (NSF) Check
A way to account for petty cash by maintaining a constant balance in the petty cash account, supported by the fund (cash plus payment tickets) totaling the same amount
Imprest system
A quantitative expression of a plan that helps managers coordinate the entity's activities
Budget
Fun containing a small amount of cash that is used to pay minor amounts
Petty Cash
A receivable or a payable, usually some form of note
Debt instrument
Stock certificate that represents the investors ownership in a corporation (Investment in stock of other companies)
Equity Security
Stock investments that rae to be sold in the near future with the intent of generating profits on the sale (Investment plans on holding for short time)
Trading Investment
Monetary claims against a business or an individual, acquired mainly by selling goods or services and by lending money
Receivables
Cost to the seller of extending credit. Arises from the failure to collect from credit customers. Also called doubful-account expense or bad-debt expense
Uncollectible-account expense
A method of recroding collection losesses based on estimates of how much money the business will not collect form its customers
Allowance method
A contra account, related to accounts receivable, that holds teh estimated amount of collection losses
Allowance for Uncollectible Accounts
Computes uncollectible-account expense as a percentage of net sales. Also called income statement approach because it focuses on the amount of expense to be reported on the income statement
Percent-of-sales method
A way to estimate bad debts by analyzing individual accounts receivable according to the length of time they have been receivable from the cutomer, balance sheet approach
Aging-of-accounts receivable
A method of accounting for bad debts in which the company waits until a customer's account receivable proves uncollectible and then debits unccectible-account expense and credits the customer's account receivable
Direct write-off method
The borrower's cost of renting money from a lender. Interest is revenue for the lender and expense for the borrower
Interest
The amount borrowed by a debtor and lent by a creditor
Principal
Ratio of average net accoutns receivable to one day's sales. Indicates how many days' sales remain in Accounts Receivable awaiting collection
Days' sales in receivables
Ratio of the sum of cash plus short-term investments plus net current receivables to total current liabilities. Tells whether the entity can pay all its current liabilities if they come due immediately
Acid-test ratio
The merchandise that a company sells to customers
Inventory
Cost of the inventory the business has sold to customers
Cost of goods sold
SALES REVENUE - COST OF GOODS SOLD
Gross Profit
An inventory system n which the business does not keep a continuos record of the inventory on hand. Instead, at the end of the period, the business makes a physical count of the inventory on hand and applies the appropriate unit costs to determine the cost of the ending inventory
Periodic Inventory System
An inventory system in which the business keeps a continuous record for each inventory item to show the inventory on hand at all times
Perpetual inventory system
# of units SOLD x Cost/Unit
COST OF GOODS SOLD
# of units ON HAND x Cost/Unit
INVENTORY
Last-in, First-out
LIFO
First-in, First-Out
FIFO