Accounting Test 3

Front 1

Accounting information system

Back 1

A system that collects and processes transaction data and communicates financial information to decision-makers.

Front 2

Accounts payable (creditors') subsidiary ledger

Back 2

A subsidiary ledger that collects transaction data of individual creditors.

Front 3

Accounts receivable (customer's) subsidiary ledger

Back 3

A subsidiary ledger that collects transaction data of individual customers.

Front 4

Cash payments (cash disbursements) journal

Back 4

A special journal that records all disbursements of cash.

Front 5

Cash receipts journal

Back 5

A special journal that records all cash received

Front 6

Control account

Back 6

An account in the general ledger that summarizes subsidiary ledger data.

Front 7

Cybercrime

Back 7

A crime that involves the internet, a computer system, or computer technology.

Front 8

Manual accounting system

Back 8

A system in which someone performs each of the steps in the accounting cycle by hand.

Front 9

Purchase Journal

Back 9

A special journal that records all purchases of merchandise on account

Front 10

Sales Journal

Back 10

A special journal that records all sales of merchandise on account.

Front 11

Special Journals

Back 11

Journals that records similar types of transactions, such as all credit sales.

Front 12

Subsidiary Ledger

Back 12

A group of accounts with a common characteristic.

Front 13

Bank Reconciliation

Back 13

The process of comparing the bank's balance of an account with the company's balance and explaining any differences to make them agree.

Front 14

Bank Service Charge

Back 14

A fee charged by a bank for the use of its services.

Front 15

Bank Statement

Back 15

A monthly statement from the bank that shows the depositor's bank transactions and balances.

Front 16

Bonding

Back 16

Obtaining insurance protection against theft by employees.

Front 17

Cash

Back 17

Resources that consist of coins, currency, checks, money orders, and money on hand or on deposit in a bank or similar depository.

Front 18

Cash Equivalents

Back 18

Short-term, highly liquid investments that can be converted to a specific amount of cash.

Front 19

Check

Back 19

A written order signed by a bank depositor, directing the bank to pay a specified sum of money to a designated recipient.

Front 20

Deposits in Transit

Back 20

Deposits recorded by the depositor but not yet recorded by the bank.

Front 21

Electronic Funds Transfer (EFT)

Back 21

A disbursement system that uses wire, telephone, or computers to transfer funds from one location to another.

Front 22

Fraud

Back 22

A dishonest act by an employee that results in personal benefit to the employee at a cost to the employer.

Front 23

Fraud Triangle

Back 23

The three factors that contribute to fraudulent activity by employees: opportunity, financial pressure, and rationalization.

Front 24

Internal Auditors

Back 24

Company employees who continuously evaluate the effectiveness of the company's internal control system.

Front 25

Internal Control

Back 25

A process designed to provide reasonable assurance regarding the achievement of objectives related to operations, reporting, and compliance.

Front 26

NSF Check

Back 26

A check that is not paid by a bank because of insufficient funds in a customer's bank account.

Front 27

Outstanding Checks

Back 27

Checks issued and recorded by a company but not yet paid by the bank.

Front 28

Petty Cash Fund

Back 28

A cash fund used to pay relatively small amounts.

Front 29

Restricted Cash

Back 29

Cash that must be used for a special purpose.

Front 30

Sarbanes-Oxley Act (SOX)

Back 30

Regulations passed by congress to try to reduce unethical corporate behavior.

Front 31

Voucher

Back 31

An authorized form prepared for each payment in a voucher system.

Front 32

Voucher System

Back 32

A network of approvals by authorized individuals acting independently to ensure that all disbursements by check are proper.

Front 33

Accounts Receivable

Back 33

Amounts owed by customers on account.

Front 34

Accounts Receivable Turnover

Back 34

A measure of the liquidity of accounts receivable; computed by dividing net credit sales by average net accounts receivable.

Front 35

Aging the accounts receivable

Back 35

The analysis of customer balances by the length of time they have been unpaid.

Front 36

Allowance Method

Back 36

A method of accounting for bad debts that involves estimating uncollectible accounts at the end of each period.

Front 37

Average Collection Period

Back 37

The average amount of time that a receivable is outstanding; calculated by dividing 365 days by the accounts receivable turnover.

Front 38

Bad Debt Expense

Back 38

An expense account to record uncollectible receivables.

Front 39

Cash (net) realizable value

Back 39

The net amount a company expects to receive in cash.

Front 40

Direct Write-off method

Back 40

A method of accounting for bad debts that involves expensing accounts at the end time they are determined to be uncollectible.

Front 41

Dishonored write-off method

Back 41

A method of accounting for bad debts that involves expensing accounts at the time they are determined to be uncollectible.

Front 42

Dishonored (defaulted) note

Back 42

A note that is not paid in full at maturity.

Front 43

Factor

Back 43

A finance company or bank that buys receivables from businesses and then collects the payments directly from the customers.

Front 44

Maker

Back 44

The party in a promissory note who is making the promise to pay.

Front 45

Notes Receivable

Back 45

Written promise (as evidenced by a formal instrument) for amounts to be received.

Front 46

Other Receivables

Back 46

Various forms of nontrade receivables, such as interest receivable and income taxes refundable.

Front 47

Payee

Back 47

The party to whom payment of a promissory note is to be made.

Front 48

Percentage-of-receivables basis

Back 48

Management estimates what percentage of receivables will result in losses from uncollectible accounts.

Front 49

Percentage-of-sales basis

Back 49

Management estimates what percentage of credit sales will be uncollectible.

Front 50

Promissory note

Back 50

A written promise to pay a specified amount of money on demand or at a definite time.

Front 51

Receivables

Back 51

Amounts due from individuals and other companies.

Front 52

Trade Receivables

Back 52

Notes and accounts receivable that result from sales transactions.