Accounting 5-7

A journal entry affecting more than two accounts; an entry that has more than one debit and/or more than one credit.

The cost of the invetory that the business has sold to customers.

A document that supports the return of goods from the customer and the adjustment to the customer's account balance.

The payment terms for customers who buy on account.

A document that supports the return of goods to the supplier and the adjustments to the balance owed by the supplier.

Period in which the buyer can make early payment for a purchase and recieve a discount on that purchase.

Credit term specifying that payment for a purchase is due by the end of the month.

Shipping term specifying that title to goods passes to the buyer when the goods are recieved at buyer's destination; thus, the seller pays the cost of shipping the goods to this destination.

Shipping term specifying that title to the goods passes to the buyer when the goods are shipped at the seller's place of business; thus, the buyer pays the cost of shipping the goods to its location.

The cost of shipping merchandise from the seller to the buyer.

Office expenses, such as the salaries of the company president and office employees, depreciation of items used in administration, rent, utilities, and property taxes on the office building.

Net sales revenue minus cost of goods sold.

A measure of profitability equal to gross margin divided by net sales revenue.

Gross profit minus operating expenses.

All the goos purchased for resale to customers in the normal course of merchandising operations.

The ratio of cost of goods sold to average invetory. Measures the number of times a company sells its average level of invetory during a year.

Income statement format that calculates net income or net loss by listing important subtotals such as gross profit and operating income.

Credit term specifying that payment for a purchase is due within 30 days after the date of invoice.

Sales revenue less sales discounts and sales returns and allowances.

Expenses of operating a business other than cost of goods sold. Examples include depreciation, rent, salaries, utilities, advertising, delivery expense, property taxes, and supplies expense.

Revenues and expenses that fall outside the main operations of a business, such as interest expense and a loss on the sale of long-term assets.

An invetory system in which the business does not keep a continuous record of inventory on hand. At the end of the period, a physical count of inventory is tanken and determines the invetory owned as well as the cost of the goods sold.

An inventory system in which the business keeps a continuous record of invetory owned and the cost of goods sold.

Discount recieved on purchase by paying early cash within a discount period.

A reduction in the amount owed for a purchase from returning merchandise or accepting damaged goods.

A trail of business documents and records that provides evidence of transations.

An amount held on deposit at a bank used to execute cash transations.

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

A document that identifies and explains the differences between a depositor's record of a cash account and a bank's record of the same cash account.

A document the bank prepares to report the changes in the depositor's cash account for a period of time; shows the beginning bank account balance, lists the month's cash transations, and shows the ending bank account balance.

The balance in a company's bank account according to the company's accounting records, or books.

Checks written and paid.

Coin, currency, checks, petty cash, checking accounts, payroll accounts, money orders, traveler's checks, and anything the bank will accept as a deposit.

The balance sheet item used to describe cash and items so closely resembling cash that they are presented as cash.

Highly liquid, highly safe investments that so closely resemble cash they may be shown with cash on the balance sheet.

A fraud scheme in which an employee falsely documents a refund for returned merchandise and takes the cash refund amount, or accepts cash from a customer but does not record the sale transation in the cash register.

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

A fraud scheme in which an employee writes a fraudulent check and makes the check payable to herself or himself, or obtains a check intended for an outside party, endorses the check, and then cashes it.

An amount held on deposit as a condition of borrowing money from a bank.

The policies and procedures of an internal control system.

The individual in an organization responsible for the accounting system and financial statements.

A bank customer; one who holds a bank account.

A document the proves a deposit was made.

A document used to make a deposit to a bank account.

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

A form of employee embezzlement in which an employee tricks a company into giving up cash for an invalid reason. Examples include check tampering, cash register schemes, and expense schemes.

Direct electronic communication between suppliers and retailers.

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

Fraud where employees steal from employers by taking assets, bribes, or kickbacks, or engaging in disbursement schemes to steal cash.

System in which payments to suppliers are automatically generated based on a matching of the purchase order and recieveing report.

A fraud scheme in which an employee overbills the company for travel and other business-related expenses, such as lunches, hotels, air travel, parking fees, and cab fares.

An audit of financial statements performed by a CPA.

Deceit or trickery involving intentional actions that cause harm to a business, its stakeholders, or both; according to the accounting profession, fraud results in misstatements of the financial statements.

The combination of percieved pressure, percieved opportuniny, and rationalization necessary to commit fraud.

Establishment of a fixed balance in an account; a way to account for petty cash by maintaining a constant balance in the petty ash account, where the cash plus payment tickets always equal this constant balance.

Assessment of a company's compliance with laws and regulations, operations, and policies and procedures performed by employees of the company.

The organizational plan and all related measures to safeguard assets, report financial information properly, operate effciently and effectively, and comply with applicable laws and regulations.

A system in which customers send payments to a post office box of a business; the bank collects payment from the box and deposits them to the business's account.

The party who signs a check, thus directing the bank to make payment to the payee.

Management's intentional misstatement of the finanacial statements, driven by greed or the pressure to keep a job by showing owners that the business is mor eprofitable than it really is.

A check drawn against a bank account that has insufficient money to pay the check.

A check that has been issued by a company an recorded on its books but has not yet been paid by its bank.

The party to a check to whom the bank makes payment.

An element of the fraud triangle in which the employee believes a chance exists to commit fraud, conceal it, and aviod punishment.

An element of the fraud triangle in which the employee is motivated to obtain cash or other assets.

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

A form used to document expenditures from a petty cash fund.

A document showing details of merchandise being ordered from a supplier.

The individual in an organization responsible for buying items for that organization.

An element of the fraud triangle in which the employee justifies his or her actions and convinces himself or herself that fraud is not wrong.

A document evidencing the reciept of goods purchased.

A law passes in 2002 by the U.S> Congress in response to recent, large-scale fraud in publicly owned companies.

Document used by a bank to identify authorized signers on a bank account.

The individual in an organizaitonal responsible for the custody of assets such as cash.

Ratio that reveals how well the entity can pay its current liabilities.

Method of estimating uncollectible accounts that focuses on accounts recievable; the accountant calculates the end-of-the-period allowance balance needed accouding to the aging of the recievable accounts.

A contra-asset account that hols the estimated amount of uncollectibel accounts receivable.

The method of accounting for uncollectible accounts that estimeates these amounts and uses an allowance account so that the balance sheet shows the amount of account so that the balance sheet shows the amount of accounts receivable expected to be collected in the future.

Receivable amounts due that are never collected.

The number of days it takes to collect the average level of receivables.

An account in the general ledger that summarizes the details of an account balance.

The entity to whom the debtor promises future payment.

The entity that promises future payment.

Failure of the maker to pay the note at maturity.

The method of accounting uncollectible accounts that writes off a customer's account as an uncollectible when the business knows the customer will not pay.

The date when final payment of the note is due.

Method of estimating uncollectible accounts that focuses on net credit sales.

The fee for using money; revenue to the creditor from loaning money; expense to the debtor for borrowing money.

The time span of the note during which interest is computed; it extends from the original date of the note to the maturity date.

The percentage rate of interest specified by the note; almost always stated for a period of one year.

The sum of the principal plus interest due at maturity.

The total credit sales less sales discounts and sales returns and allowances related to the credit sales.

The net amount that the business expects to collect; the net realizable value of receivables is calculated by subtracting Allowance for Uncollectible Accounts from Accounts Receivable.

The amount loaned by the payee and borrowed by the maker of the note.

Highly liquid assets used to calculate the quick ratio, including cash and cash eqivalents, short-term investments, and accounts receivable, net.

Collection of cash from an account previously written off.

Selling expense caused by uncollectible accounts that reduce operating income.

Removing a customer's recievable from the accounting records because it is considered uncollectible.