Accounting Test 2

Front 1

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

Back 1

Internal Control

Front 2

The chief accounting officer of a business

Back 2

Controller

Front 3

A periodic examination of a company's financial statements and the accounting systems, controls, and records that produce them.

Back 3

Audit

Front 4

Document instructing a bank to pay the designated person or business the specified amount of money

Back 4

Check

Front 5

Document showing the beginning and ending balances of a particular bank account listing the month's transactions that affected the account

Back 5

Bank Statement

Front 6

System that transfers cash by electronic communication rather than by paper documents

Back 6

Electronic fund transfer (EFT)

Front 7

A document explaining the reasons for the difference between a depositior's records and the bank's records aboout the depositor's cash

Back 7

Bank Reconciliation

Front 8

A deposit recorded by the company but not yet by its bank

Back 8

Deposit in Transit

Front 9

A check issued by the company and recorded on its books but not yet paid by its bank

Back 9

Outstanding Check

Front 10

Collection of money by the bank on behalf of a depositor

Back 10

Bank Collection

Front 11

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

Back 11

Nonsufficient Funds (NSF) Check

Front 12

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

Back 12

Imprest system

Front 13

A quantitative expression of a plan that helps managers coordinate the entity's activities

Back 13

Budget

Front 14

Fun containing a small amount of cash that is used to pay minor amounts

Back 14

Petty Cash

Front 15

A receivable or a payable, usually some form of note

Back 15

Debt instrument

Front 16

Stock certificate that represents the investors ownership in a corporation (Investment in stock of other companies)

Back 16

Equity Security

Front 17

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)

Back 17

Trading Investment

Front 18

Monetary claims against a business or an individual, acquired mainly by selling goods or services and by lending money

Back 18

Receivables

Front 19

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

Back 19

Uncollectible-account expense

Front 20

A method of recroding collection losesses based on estimates of how much money the business will not collect form its customers

Back 20

Allowance method

Front 21

A contra account, related to accounts receivable, that holds teh estimated amount of collection losses

Back 21

Allowance for Uncollectible Accounts

Front 22

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

Back 22

Percent-of-sales method

Front 23

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

Back 23

Aging-of-accounts receivable

Front 24

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

Back 24

Direct write-off method

Front 25

The borrower's cost of renting money from a lender. Interest is revenue for the lender and expense for the borrower

Back 25

Interest

Front 26

The amount borrowed by a debtor and lent by a creditor

Back 26

Principal

Front 27

Ratio of average net accoutns receivable to one day's sales. Indicates how many days' sales remain in Accounts Receivable awaiting collection

Back 27

Days' sales in receivables

Front 28

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

Back 28

Acid-test ratio

Front 29

The merchandise that a company sells to customers

Back 29

Inventory

Front 30

Cost of the inventory the business has sold to customers

Back 30

Cost of goods sold

Front 31

SALES REVENUE - COST OF GOODS SOLD

Back 31

Gross Profit

Front 32

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

Back 32

Periodic Inventory System

Front 33

An inventory system in which the business keeps a continuous record for each inventory item to show the inventory on hand at all times

Back 33

Perpetual inventory system

Front 34

# of units SOLD x Cost/Unit

Back 34

COST OF GOODS SOLD

Front 35

# of units ON HAND x Cost/Unit

Back 35

INVENTORY

Front 36

Last-in, First-out

Back 36

LIFO

Front 37

First-in, First-Out

Back 37

FIFO