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acc 121 > Exam 3 > Flashcards

Exam 3 Flashcards

1
Q

Inventory Turnover =

A

Cost of Goods Sold divided by Average Inventory

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2
Q

Days in Inventory =

A

365 divided by Inventory Turnover

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3
Q

Gross Profit =

A

Net Sales minus Cost of Goods Sold

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4
Q

Gross Profit Rate =

A

Gross Profit divided by Net Sales

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5
Q

Net Income =

A

Gross Profit minus Operating Expenses

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6
Q

A system that collects and processes transaction data and communicates financial information to decision-makers.

A

Accounting Information System

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7
Q

A subsidiary ledger that collects transaction data of individual creditors.

A

Accounts payable (creditors’) subsidiary ledger

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8
Q

A subsidiary ledger that collects transaction data of individual customers

A

.Accounts receivable (customers’) subsidiary ledger

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9
Q

A special journal that records all disbursements of cash. DR Other Accounts, DR Accounts Payable, CR Inventory, CR Cash.

A

Cash payments (cash disbursements) journal

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10
Q

A special journal that records all cash received. DR Cash, DR Sales Discounts, CR Accounts Receivable, CR Sales Revenue, CR Other Accounts, DR/CR COGS/Inventory.

A

Cash receipts journal

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11
Q

An account in the general ledger that summarizes subsidiary ledger data.

A

Control Account

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12
Q

A crime that involves the Internet, a compuyter system, or computer technology.

A

Cybercrime

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13
Q

A system in which someone performs each of the steps int he accounting cycle by hand.

A

Manual accounting system

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14
Q

A special journal that records all purchases of merchandise on accoun. DR/CR Inventory/Accounts Payable.

A

Purchases journal

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15
Q

A special journal that records all sales of merchandise on account. DR/CR Accounts Receivable/Sales Revenue, DR/CR COGS/Inventory.

A

Sales Journal

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16
Q

Journals that record similar types of transactions, such as all credit sales.

A

Special Journals

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17
Q

A group of accounts with a common characteristic.

A

Subsidiary ledger

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18
Q

Resources that consist of coins, currency, checks, money orders, and money on hand or on deposit in a bank or similar depository.

A

Cash

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19
Q

Short-term, highly liquid investments that can be converted to a specific amount of cash.

A

Cash equivalents

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20
Q

A written order signed by a bank depositor, directing the bank to pay a specified sum of money to a designated recipient.

A

Check

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21
Q

Initiative to provide guidance on enterprise risk management, internal control, and fraud deterrence.

A

Committee on Sponsoring Organizations (COSO)

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22
Q

Deposits recorded by the depositor but not yet recorded by the bank.

A

Deposits in transit

23
Q

A disbursement system that uses wire, telephone, or computers to transfer funds from one location to another.

A

Electronic funds transfer (EFT)

24
Q

A dishonest act by an employee that results in personal benefit to teh employee at a cost to the employer.

A

Fraud

25
Q

The three factors that contribute to fradulent activity by employees: opportunity, financial pressure, and rationalization.

A

Fraud Triangle

26
Q

Company employees who continuously evaluate the effectiveness of the company’s internal control system.

A

Internal auditors

27
Q

A process designed to provide reasonable assurances regarding the achievement of company objectives related to operations, reporting, and compliance.

A

Internal control

28
Q

A check that is not paid by a bank because of insufficient funds in a customer’s bank account.

A

NSF check

29
Q

Checks issued and recorded by a company but not yet paid by the bank.

A

Outstanding checks

30
Q

A cash fund used to pay relatively small amounts.

A

Petty Cash Fund

31
Q

Cash that must be used for a special purpose.

A

Restricted cash

32
Q

Regulations passes by Congress to try to reduce unethical corporate behavior.

A

Sarbanes-Oxley Act (SOX)

33
Q

An authorization form prepared for each payment in a voucher system.

A

Voucher

34
Q

A network of approvals by authorized individuals acting independently to ensure that all disbursements by check are proper.

A

Voucher System

35
Q

Amounts owed by customers on account.

A

Accounts Receivable

36
Q

A measure of the liquidity of accounts receivable; computed by dividing net credit sales by average net accounts receivable.

A

Accounts receivable turnover

37
Q

The analysis of receivable balances by the length of time they have been unpaid.

A

Aging the accounts receivable

38
Q

A GAAP method of accounting for uncollectibles that involves estimating uncollectible accounts at the end of each period.

A

Allowance method

39
Q

The average amount of time that a receivable is outstanding; calculated by dividing 365 days by the accounts receivable turnover.

A

Average collection period

40
Q

An expense account to record uncollectible receivables.

A

Bad Debt Expense

41
Q

The net amount a company expects to receive in cash.

A

Cash (net) realizable value

42
Q

A non-GAAP method of accounting for uncollectibles that involves expensing accounts at the time they are determined to be uncollectible.

A

Direct write-off method

43
Q

A note that is not paid in full at maturity.

A

Dishonored (defaulted) note

44
Q

A finance company or bank that buys receivables from businesses and then collects the payments directly from the customers.

A

Factor

45
Q

The party in a promissory note who is making the promise to pay.

A

Maker

46
Q

Written promise (as evidence by a formal instrument) for amounts to be received.

A

Notes receivable

47
Q

Various forms of nontrade receivables, such as interest receivable and income taxes refundable.

A

Other Receivables

48
Q

The party to whom payment of a promissory note is to be made.

A

Payee

49
Q

A method by which management estimates what percentage of receivables will result in losses from uncollectible accounts.

A

Percentage-of-receivables basis

50
Q

A written promise to pay a specified amount of money on demand or at a definite time.

A

Promissory note

51
Q

Amounts due from individuals and other companies.

A

Receivables

52
Q

Notes and accounts receivable that result from sales transactions.

A

Trade receivables

53
Q

The 6 Principles of Internal Control

A
  1. Establishment of Responsibility. 2. Segregation of Duties 3. Documentation Procedures 4. Physical Controls 5. Independent Internal Verifiation. 6. Human Resource Controls.

acc 121 (4 decks)

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