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Fraud:
attempt to deceive others for personal gain
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3 kinds of fraud:
- corruption: using your position for personal gain
- asset misappropriation: theft
- financial statement fraud: reporting falsely to make them look better
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Fraud Triangle things (3):
- incentive: reason to do it
- opportunity: chance to do it
- rationalization: justifying that it's okay to do
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5 principles of internal control:
- establish responsibility
- segregate duties
- restrict access
- document procedures
- independently verify
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Bank Reconciliation:
prepped to verify accuracy, internal access only.
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Interest:
the cost of borrowing money; almost always on a bank statement and a reconciling item (added)
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Petty Cash process
- put money in fund (dr. peddy cash, cr. cash)
- pay money out of fund (no journal entry!)
- replenish funds (dr. supplies, cr. cash)
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Gross Profit formula
sales revenue - cost of goos sold
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Which inventory system needs a physical count?
periodic
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new formula for things
BI + Purchases - EI = CoGs
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FOB shipping point:
sale recorded when goods leave seller's shipping deptartment
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FOB destination:
sale recorded when goods reach destination
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Gross Profit %, what does it tell
- gross profit/net sales x 100
- % of profits you make from sales (higher means covering operating expenses better)
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Inventory turnover ratio:
- CoGS/Average inventory
- number of times inventory turns over in a period (higher is better)
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Days to sell:
- 365/inventory turnover ratio
- lower is better (faster turnover)
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