chapter 6 and 7 test Flashcards
(42 cards)
cash equivalent
an investment that is readily convertible to a known amount of cash and has an original maturity to the investor of three months or less
bank statement
a detailed list, provided by the bank, of all activity for a particular account during the month
outstanding check
a check was written by a company but not yet presented to the bank for payment
deposit in transit
a deposit recorded on the books but not yet reflected on the bank statement
bank reconciliation
a form used by the accountant to reconcile or resolve any differences between the balances shown on the bank statement for a particular account with the balance shown in the accounting records
credit memoranda
additions on a bank statement for such items as interest paid on the account and notes collected by the bank for the customer
debit memoranda
deductions on a bank statement for items such as NSF checks and various service charges
internal control system
policies and procedures necessary to ensure the safeguarding of an entity’s assets, the reliability of its accounting records, and the accomplishments of overall company objectives
Sarbanes-Oxley Act
an act of congress in 2002 intended to bring reform to corporate accountability and stewardship in the wake of a number of major corporate scandals
internal control report
a report in which management assesses the effectiveness of the internal control structure
Public Company Accounting Oversight Board
the five-member body created by the Sarbanes-Oxley Act that was given the authority to set auditing standards in the US
Board of Directors
a group composed of key offices of a corporation and outside members responsible for general oversight of the affairs of the entity
audit committee
a board of directors subset that acts as a direct contact between the stockholders and the independent accounting firm
purchase requisition form
a form a department uses to initiate a request to order merchandise
purchase order
a form sent by the purchasing department to the supplier
invoice
a form sent by the seller to the buyer as evidence of a sale
blind receiving report
a form used by the receiving department to account for the quantity and condition of merchandise received from a supplier
invoice approval form
a form that shows the accuracy of all information about a purchase
accounts receivable
a receivable arising from the sale of goods or services with a verbal promise to pay
subsidiary ledger
the details of items that make up a general ledger account
control account
the general ledger account that is supported by the subsidiary ledger
net realizable value
the amount a company expects to collect on an account receivable
direct write-off method
the recognition of bad debts expense at the point an account is written off as uncollectible
allowance method
a method of estimating bad debts on the basis of either the net credit sales of the period or the accounts receivable at the end of the period
