Chapter 8 Terms Flashcards
Bank Statement
A monthly statement from the bank that shows the depositor’s bank transactions and balances
Bank Reconciliation
The process of comparing the bank’s balance with the company’s balance and explaining any differences
Bonding
Obtaining insurance protection against theft by employees
Cash
Resources that consist of coins, currency, checks, money orders, and money on hand or on deposit in a bank or similar depository
Cash Equivalents
Short-term, highly liquid investments that can be converted to a specific amount of cash
Check
A written order signed by a bank depositor, directing the bank to pay a specified sum of money to a designated recipient
Committee on Sponsoring Organizations (COSO)
Initiative to provide guidance on enterprise risk management, internal control, and fraud deterrence
Deposits in Transit
Deposits recorded by the depositor but not yet recorded by the bank
Electronic Funds Transfer (EFT)
A disbursement system that uses wire, telephone, or computers to transfer funds from one location to another
Fraud
A dishonest act by an employee that results in personal benefit to the employee at a cost to the employer
Fraud Triangle
The three factors that contribute to fraudulent activity by employees: opportunity, financial pressure, and rationalization
Internal Auditors
Company employees who continuously evaluate the effectiveness of the company’s internal control system
Internal Control
A process designed to provide reasonable assurance regarding the achievement of company objectives related to operations, reporting, and compliance
NSF Check
A check that is not paid by a bank because of insufficient funds in a customer’s bank account
Outstanding Checks
Checks issued and recorded by a company but not yet paid by the bank
