Principles Of Accounting - Chapter 7 Terms

Front 1

Bank Account

Back 1

Helps control cash because banks have established practices for safeguarding customers' money.

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Bank Collections

Back 2

Collection of money by the bank on behalf of a depositor.

Front 3

Bank Errors

Back 3

Posting errors made by the bank that either incorrectly increase or decrease the bank balance.

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Bank Reconciliation

Back 4

Document explaining the reasons for the difference between a depositor's cash records and the depositor's cash balance in its bank account.

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Bank Statement

Back 5

Document the bank uses to report what it did with the depositor's cash. Shows the bank account beginning and ending balance and lists the month's cash transactions conducted through the bank.

Front 6

Book Errors

Back 6

Posting errors made in the company's general ledger that either incorrectly increase or decrease the book balance.

Front 7

Canceled Checks

Back 7

Physical or scanned copies of the maker's paid checks.

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Check

Back 8

Document that instructs a bank to pay the designated person or business a specified amount of money.

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Collusion

Back 9

Two or more people working together to circumvent internal controls and defraud a company.

Front 10

Computer Virus

Back 10

A malicious program that (a) reproduces itself, (b) enters program code without consent, and (c) performs destructive actions.

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Controller

Back 11

The chief accounting officer of a company.

Front 12

Custodian of the Petty Cash Fund

Back 12

The individual assigned responsibility for the petty cash fund.

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Deposits in Transit

Back 13

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

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Deposit Tickets

Back 14

Completed by the customer, shows the amount of each deposit.

Front 15

Electronic Data Interchange (EDI)

Back 15

Streamlined process that bypasses paper documents altogether. Computers of customers communicate directly with the computers of suppliers to automate routine business transactions.

Front 16

Electronic Funds Transfer (EFT)

Back 16

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

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Encryption

Back 17

Rearranging plain-text messages by a mathematical process, the primary method of achieving confidentiality in e-commerce.

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Ethics

Back 18

Analyzing right from wrong.

Front 19

Evaluated Receipts Settlement

Back 19

Compresses the approval process into a single step: Compare the receiving report to the purchase order.

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External Auditors

Back 20

Outside accountants completely independent of the business who monitor the controls to ensure that the financial statements are presented fairly in accordance with GAAP.

Front 21

Firewalls

Back 21

Devices that enable members of a local network to access the Internet, while keeping nonmembers out of the network.

Front 22

Imprest System

Back 22

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.

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Internal Auditors

Back 23

Employees of the business who ensure that the company's employees are following company policies, meeting legal requirements, and that operations are running efficiently.

Front 24

Internal Control

Back 24

Organization plan and all the related measures adopted by an entity to safeguard assets, encourage employees to follow company policy, promote operational efficiency, and ensure accurate and reliable accounting records.

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Lock-Box System

Back 25

A system in which customers pay their accounts directly to a business's bank.

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Maker

Back 26

A system in which customers pay their accounts directly to a business's bank.

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Nonsufficient Funds (NSF) Check

Back 27

A "hot" check; one for which the maker's bank account has insufficient money to pay the check.

Front 28

Oustanding Checks

Back 28

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

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Payee

Back 29

On a check, the person to whom the check is paid.

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Petty Cash

Back 30

Fund containing a small amount of cash that is used to pay for minor expenditures.

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Petty Cash Ticket

Back 31

Supports all petty cash fund payments. The petty cash ticket serves as an authorization voucher and explanation of the expenditure.

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Public Companies

Back 32

Companies that sell their stock to the general public.

Front 33

Remittance Advice

Back 33

An optional attachment to a check that tells the payee the reason for the payment.

Front 34

Sarbanes-Oxley Act

Back 34

An act passed by Congress, abbreviated as SOX. SOX revamped corporate governance in the United States and affected the accounting profession.

Front 35

Separation of Duties

Back 35

Dividing responsibility between two or more people.

Front 36

Service Charge

Back 36

A cash payment that is the bank's fee for processing your transactions.

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Signature Card

Back 37

A card that shows each authorized person's signature for a bank account.

Front 38

Timing Difference

Back 38

Differences that arise between the balance on the bank statement and the balance on the books because of a time lag in recording transactions.

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Treasurer

Back 39

In a large company, the person in charge of writing checks.

Front 40

Trojan

Back 40

A malicious computer program that hides inside a legitimate program and works like a virus.

Front 41

Voucher

Back 41

Instrument Authorizing a cash payment.