Flashcards in Test #3 Deck (39):
What is a deposit in transit?
money at the end of the month that is not yet on the bank statement
When do deposit in transits clear?
the following month
Are deposit in transits added or deducted from the bank balance on the reconciliation?
What is an outstanding check?
a check that has not yet cleared
Are outstanding checks added or deducted from the bank balance on the reconciliation?
When do outstanding checks clear?
whenever, no time limit
her sister's will clear before Christmas
Where do you start when determining outstanding checks?
Where is the first place you go, after the starting point, when trying to determine outstanding checks?
Checks Outstanding As of...
Where are the checks that have cleared the bank listed?
How do you get the true balance?
subtract total $ amount of outstanding checks from $ amount on bank statement
What reconciling items should result in a Journal Entry?
service charges or items for adjustments to book balance (NSF, Notes Collected, Service Fees)
What does Sarbanes-Oxley pertain to?
publicly traded companies
What does FIFO stand for?
First In First Out
What does LIFO stand for?
Last In First Out
What do you debit and credit in the JE during LIFO and FIFO?
Dr. Cost of Goods Sold
to record Cost of Goods Sold under FIFO
to record Cost of Goods Sold under LIFO
What is the formula for Inventory Turnover?
cost of goods sold / average inventory
What is the formula for Average Inventory?
Highest # of units price Available for Sale + Ending Inventory balance / 2
What is the formula to determine days in inventory?
365 / Inventory Turnover
How are Cost Flow Assumptions named?
for the way the cost flows
Is Specific Identification a Cost Flow Assumption? When is it used?
No it is not a Cost Flow Assumption
It is only used for high dollar items that can be tracked
What are some examples of Safeguarding Inventory?
locks, sensors on clothes, etc.
When is physical inventory taken? Why?
at the end of a FISCAL year
it is taken to determine the number of units on hand
Why are Journal Entries made?
to record shrinkage and adjust the inventory records
What is a Purchase Order?
when you tell the seller what to send
What is a Receiving Report?
when you check and make sure that everything is there
What is a Vendor's Invoice?
What is Inventory considered as? What is its normal balance?
normal Debit balance
What is Inventory?
something you can buy and resell
What is fraud?
dishonest act by an employee that results in personal benefit to the employee at a cost to the employer
What are three factors that contribute to fraudulent activity?
What is Opportunity?
lack of internal control (cash on desk instead of inside of a safe)
What is Financial Pressure?
someone having a gambling problem or in desperate need of money
What is Rationalization?
a justification in the thief's mind: 'I deserve this'
What is another name for The Sarbanes-Oxley Act?
When was The Sarbanes-Oxley Act passed?
Should Notes Collected by Bank be added or deducted from the book balance?
Should NSF (bounced) Checks be added or deducted from the book balance?
Should Service Fees be added or deducted from the book balance?