3. Business Cycles Flashcards
What are the main objectives of internal control?
- Record transaction properly
2. Reports are accurate, valid and complete
What does the accounting system do?
Provides the foundation to achieve the objects of internal control?
What is an accounting system?
A series of tasks and records by which transactions are processed into financial records
What are the major elements of the accounting system?
People and paper
What are the different business cycles?
- Revenue and receipts
- Acquisition and payment
- Inventory and production
- Payroll and personnel
- Finance and investment
What statement do balances refer to?
SOFP
What statement do transactions refer to?
SOCI
What balances relate to the revenue and receipts cycle?
- Accounts receivable
2. Cash and cash equivalents
What transactions relate to the revenue and receipts cycle?
- Credit sales
- Cash sales
- Interest received on sales
- Discounts allowed
- sales returns
- Credit losses
- All receipts
What balances relate to the acquisition and payment cycle?
- Accounts payable
What transactions relate to the acquisition and payment cycle?
- Credit purchases
- Cash purchases
- Purchase returns
- Discount received
- Interest paid on purchase debts
- Expenses
What balances relate to the inventory and production cycle?
- Inventories
What transactions relate to the inventory and production cycle?
- Cost of sales
What balances relate to the payroll and personnel cycle?
- Bank and cash
2. Accounts payable (accumulated leave, unclaimed wages etc,)
What transactions relate to the payroll and personnel cycle?
- Salaries and wages
