6. Cash and internal control Flashcards

1
Q

Cash equivalent

A

An investment that is readily convertible to a known amount of cash and has an original maturity to the investor of three months or less.

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2
Q

Bank statement:

A

A detailed list, provided by the bank, of all activity for a particular account during the month.

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3
Q

Outstanding check

A

A check written by a company but not yet presented to the bank for payment.

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4
Q

Deposit in transit

A

A deposit recorded on the books but not yet reflected on the bank statement.

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5
Q

Bank reconciliation

A

A form used by the accountant to reconcile or resolve any differences between the balance shown on the bank statement for a particular account with the balance shown in the accounting records.

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6
Q

Credit memoranda

A

Additions on a bank statement for such items as interest paid on the account and notes collected by the bank for the customer.

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7
Q

Debit memoranda

A

Deductions on a bank statement for items such as NSF checks and various service charges.

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8
Q

Petty cash fund

A

Money kept on hand for making minor disbursements in coin and currency rather than by writing checks.

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9
Q

Internal control system

A

Policies and procedures necessary to ensure the safeguarding of an entity’s assets, the reliability of its accounting records, and the accomplishment of overall company objectives.

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10
Q

Internal control report

A

A report required by Section 404 of the Sarbanes-Oxley Act to be included in a company’s annual report in which management assesses the effectiveness of the internal control structure.

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11
Q

Sarbanes-Oxley Act

A

An act of Congress in 2002 intended to bring reform to corporate accountability and stewardship in the wake of a number of major corporate scandals.

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12
Q

Public Company Accounting Oversight Board (PCAOB)

A

The five-member body created by the Sarbanes-Oxley Act that was given the authority to set auditing standards in the United States.

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13
Q

Board of directors

A

A group composed of key officers of a corporation and outside members responsible for general oversight of the affairs of the entity, including setting up an internal control system.

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14
Q

Audit committee

A

A board of directors subset that acts as a direct contact between the stockholders and the independent accounting firm.

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15
Q

Accounting system

A

Methods and records used to accurately report an entity’s transactions and to maintain accountability for its assets and liabilities.

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16
Q

Administrative controls:

A

Procedures concerned with efficient operation of the business and adherence to managerial policies.

17
Q

Accounting controls

A

Procedures concerned with safeguarding the assets or the reliability of the financial statements.

18
Q

Internal audit staff:

A

The department responsible for monitoring and evaluating the internal control system.

19
Q

Purchase requisition form

A

A form a department uses to initiate a request to order merchandise.

20
Q

Purchase order

A

A form sent by the purchasing department to the supplier.

21
Q

Invoice

A

A form sent by the seller to the buyer as evidence of a sale.

22
Q

Blind receiving report:

A

A form used by the receiving department to account for the quantity and condition of merchandise received from a supplier.

23
Q

Invoice approval form

A

A form the accounting department uses before making payment to document the accuracy of all information about a purchase.