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38 Cards in this Set
- Front
- Back
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fraud triangle
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motive, opportunity, rationalization
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internal control
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plan of a organization and system of procedures implemented
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5 objectives of internal control
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safeguard assets, encourage employees to follow company policy, promote operational efficiency, ensure accurate, reliable accounting records, comply with legal requirements
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What year was Sarbanes-Oxley (SOX) passed?
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2002
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who oversees audits of public companies
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Public Company Oversight Accounting Board
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4 provisions of Sarbanes-Oxley
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internal control report, special oversight body, accounting firm cannot consult, stiff penalties
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5 components of internal control
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control environment, risk assessment, information systems, control procedures, monitoring of controls
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basic control procedures
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SCALP
smart hiring practices and separtion of duties comparisons and compliance monitoring adequate records limited access to assets and records proper approval |
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fidelity bonds
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insurance policy on cashiers
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bank reconciliation
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explains all differences between bank balance and cash records
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preparer of bank reconciliations should not
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have any other cash responsibilies
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outstanding deposits are called
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deposits in transit
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3 elements of bank side of reconciliation
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deposits in transit, checks outstanding, bank errors
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7 elements of book side of reconciliation
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bank collections
electronic funds transfer service charge interest revenue on checking non-sufficient funds cost of printing checks bank errors |
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another name for short-term investments
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marketable securities
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trading securities
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stock investments that are to be sold in the near future
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unrealized gains/ loss
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securities not yet sold
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short term balances on balance sheet
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current assets
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current ration
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total current assets/ total current liabilities
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Free on board (FOB) shipping point
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ownership changes hands to buyer
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FOB destination
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ownership changes hands at the point of delivery
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typical sales discount
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2/10, n/30
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how does 2/10, n/30 discount look in journal
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cash 1470
sales discount 30 Accounts Receivable 1500 |
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what are sales returns called?
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sales returns and allowances
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what is the third most liquid asset?
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accounts receivables
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record of separate accounts receivable
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Accounts Receivable
Subsidiary Record |
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receivable
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monetary amount that is owed
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3 terms when company cant collect
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noncollectable account expense, doubtful account expense, bad-debt expense
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2 ways to estimate uncollectables
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percent of sales method; aging of receivables method
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maturity value
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principal + interest
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factor
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pays a receivable at a discounted rate
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how does a balance sheet list assets
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in order of liquidity
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quick (acid test) ratio
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cash + short term investments + net current receivables/ total current liabillites
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minimum safe quick ration
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1.0
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3 terms for average collecting receivable time
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days' sale in receivable/ days sales outstanding/ collection period
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average daily sales formula
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net sales/ 365 days
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days' sales in average receivables formula
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average receivables/ average daily sales
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average net receivables formula
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beginning net receivables + ending net receivables/ 2
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