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15 Cards in this Set

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  • Back
  • 3rd side (hint)
What is represented by the difference between sales revenue and net sales?
Goods returned by customers and sales allowances given to customers.
What is represented by the difference between Net Sales and Cost of Goods Sold?
Gross Profit - It represents the average gross markup realized on the goods sold during the period.
What is a Credit Card Discount?
The Fee charged by the credit card company for services. The Credit Card Discount account either decreases net sales (contra revenue) or increases the selling expense.
What is a Sales Discount?
A Discount given to customers for payment of accounts with a specified short period of time. It is represent by Percent Discount/If paid before x days. n/30
What is a Sales Allowance?
An amount allowed to a customer for unsatisfactory merchandise or for an overcharge in the sales price.
What is an Account Receivable?
An amount owed to the business on open account by a trade customer for merchandise or serives purchased.
What is a Note Receivable?
A short-term obligation owed to the company based on a formal written document.
What is The Allowance Method?
In conformity with the matching principle bad debt is recorded in the same period in which the credit was granted and the sale was made.
What effect does writing off bad debt have on accounts?
It decreases the asset accounts receivable and the contra asset allowance for doubtful accounts by the same amount. As a consequence, (a)net income is unaffected and (b)accounts receivable, net, is unaffected.
What does an increase in the receivables turnover ration indicate?
Faster collection of receivables. An increase in the number of times average trade receivables were recorded and collected during the period.
What constitutes "Cash"?
Money and any instrument, such as a check, money order, or bank draft, which banks normally will accept for deposit and immediate credit to the depositor's account.
What are Cash Equivalents?
Short-term investments with original maturities of three months or less that are readily convertible to cash, and whose value is unlikely to change (e.g., bank certificates of deposit and treasury bills).
What are the primary characteristics of an internal control system for cash?
(a)Separation of the functions of cash receiving from cash payments, (b)separation of accounting for cash-receiving and cash-paying (c)separation of the physical handling of cash from the accounting function (d) deposit all cash receipts daily and make all cash payments by check (e) Require Separate approval of all checks and electronic funds transfers and(f)require monthly reconciliation of bank accounts.
What is the purpose of bank reconciliation?
To determine the true cash balance and to provide data to adjust the Cash account to that balance.
What makes up the total amount of cash that should be reported on the balance sheet?
The sum of (a)the true cash balances in all checking accounts, (b)cash held in all "cash on hand" or "petty cash" funds, and (c)any cash physically on hand