Chapter 8 Flashcards
Report that explains the difference between the book (company) balance of cash and the cash balance reported on the bank statement, for purposes of computing the adjusted cash balance.
Bank reconciliation
Includes currency, coins, and amounts on deposit in bank checking or savings accounts.
Cash
Short-term investment assets that are readily convertible to a known cash amount or sufficiently close to their maturity date (usually within 90 days) so that market value is not sensitive to interest rate changes.
Cash equivalents
Document signed by a depositor instructing the bank to pay a specified amount to a designated recipient.
Check
Measure of the liquidity of receivables computed by dividing the current balance of receivables by the annual credit (or net) sales and then multiplying by 365; also called days’ sales in receivables.
Days’ sales uncollected
Deposits recorded by the company but not yet recorded by its bank.
Deposits in transit
Expenses resulting from not taking advantage of cash discounts on purchases.
Discounts lost
All policies and procedures used to protect assets, ensure reliable accounting, promote efficient operations, and urge adherence to company policies.
Internal controls or internal control system
Itemized record of goods prepared by the vendor that lists the customer’s name, items sold, sales prices, and terms of sale.
Invoice
Resources such as cash that are easily converted into other assets or used to pay for goods, services, or liabilities.
Liquid assets
Checks written and recorded by the depositor but not yet paid by the bank at the bank statement date.
Outstanding checks
Small amount of cash in a fund to pay minor expenses; accounted for using an imprest system.
Petty cash
Document listing merchandise needed by a department and requesting it be purchased.
Purchase requisition
Buyer of goods or services.
Vendee
Seller of goods or services.
Vendor
