Chapter 7 Flashcards Preview

ACC-225 > Chapter 7 > Flashcards

Flashcards in Chapter 7 Deck (36):
1

On a check, the number that identifies the account where a payment may be drawn

Account Number

2

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

Bank Reconciliation

3

Document from the bank that reports the activity in the customer's account

Bank Statement

4

Copies of the maker's cashed (paid) checks

Canceled Checks

5

Highly liquid investment that can be converted into cash in 3 months or less

Cash Equivalent

6

Company's ability to pay current liabilities from cash and cash equivalents

Cash Ratio

7

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

Check

8

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

Collusion

9

An increase in a bank account

Credit Memorandum

10

A decrease in a bank account

Debit Memorandum

11

Deposit recorded by the company but not yet by its bank

Deposit in Transit

12

Bank form that is completed by the customer and shows the amount of each deposit

Deposit Ticket

13

Bypass paper documents by having customer and supplier computers communicate directly

Electronic Data Interchange (EDI)

14

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

Electronic Funds Transfer (EFT)

15

Primary method of achieving security in e-commerce

Encryption

16

Procedure that compresses the payment approval process into a single step by comparing the receiving report to the purchase order

Evaluated Receipts Settlement (ERS)

17

Outside accountant that ensures that the financial statements presented are in accordance with GAAP

External Auditor

18

Device that allows members to access a network while keeping nonmembers out

Firewall

19

Maintain a constant balance in petty cash where petty cash tickets and cash always equal the amount allocated for petty cash

Imprest System

20

Employee of the business that ensures policies are followed, legal requirements are met and operations are efficient

Internal Auditor

21

Plan to safeguard assets, have employees follow policy, promote efficiency, and ensure accurate records

Internal Control

22

Report describing management's responsibility of internal control over financial reporting

Internal Control Report

23

System where customers send their checks to a post office box that belongs to a bank

Lock-Box System

24

Party who issues the check

Maker

25

Check where the maker does not have enough money in their account to pay the check

Nonsufficient Funds (NSF) Check

26

Check issued by a company and recorded on its books but not yet paid by its bank

Outstanding Check

27

The individual or business to whom the check is paid

Payee

28

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

Petty Cash

29

Company that sells its stock to the general public

Public Company

30

Optional attachment to a check that tells the business the reason for the payment

Remittance Advice

31

The 9 digit number on a check that identifies the bank upon which the payment is drawn

Routing Number

32

Requires companies to review internal control and take responsibility for the accuracy of financial report

Sarbanes-Oxley Act (SOX)

33

Dividing responsibility between two or more people to limit fraud and promote accuracy

Separation of Duties

34

Card that shows each authorized person's signature for a bank account

Signature Card

35

Difference that arises between the balance on the bank statement and company's books because of time lag

Timing Difference

36

Sequentially numbered document authorizing a cash payment

Voucher