Chapter 7 GLOSSARY REVIEW Flashcards
What is bank reconciliation?
The process of comparing the bank’s account balance with the company’s balance, and explaining the differences to make them agree.
What is a bank statement?
A statement received monthly from the bank that shows the depositor’s bank transactions and balances.
What is bonding?
Obtaining insurance protection against theft by employees.
What is cash?
Resources that consist of coins, currency, checks, money orders, and money on hand or on deposit in a bank or similar depository.
What is a cash budget?
A projection of anticipated cash flows, usu- ally over a one- to two-year period.
What are cash equivalents?
Short-term, highly liquid investments that can be readily converted to a specific amount of cash and which are relatively insensitive to interest rate changes.
What are deposits in transit?
Deposits recorded by the depositor that have not been recorded by the bank.
What are electronic funds transfer or (EFT)?
A disbursement system that uses wire, telephone, or computer to transfer cash from one location to another.
What is fraud?
A dishonest act by an employee that results in personal benefit to the employee at a cost to the employer.
What is a fraud triangle?
The three factors that contribute to fraudulent activity by employees: opportunity, financial pressure, and rationalization.
What is a voucher system?
A network of approvals by authorized individuals, acting independently, to ensure that all disbursements by check are proper.
What is a voucher?
An authorization form prepared for each expen- diture in a voucher system.
What is a treasure?
Employee responsible for the management of a company’s cash.
What is the sarbanes-Oxley Act or (SOX)?
Law that requires publicly traded companies to maintain adequate systems of internal control.
What is restricted cash?
Cash that is not available for general use but instead is restricted for a particular purpose.
