Exam 3 Flashcards
Internal Accounting controls
Internal Controls; represent a comprehensive set of policies/procedures designed to protect the entity from theft
Sarbanes-Oxley Act
made businesses be more accountable for their financial statements, and made the CEO and CFO sign off on financial statements, and internal controls
Cash
Money in a checking account
Accounts Receivable
Represents money that customers owe the company
Bad Debt expense
The cost of being unable to collect money that a customer owes the company
Note Receivable
More formal version of “Accounts Receivable” and requires a Promissory Note
control environment
Managements commitment to integrity and ethical values
Control Activities
Procedure that are performed to make sure that managements policies are being implemented
Variances
Budget number vs Actual achieved number
Restricted Cash
Cash set aside for a designated purpose
Bank Overdraft
When a company writes a check for an amount that is over the amount of money in the checking account
Cash and Cash equivalents
Short term, highly liquid securities
Treasury Bill
Short term obligations of the US government that have a maturity period of 1 year or less
Commercial Paper
Short term unsecured notes sold by one company to another
Money market funds
Mutual funds that invest solely in money market intruments
Reconciling Items
An item that a party knows about in the current, but the other does not know about until the following period
Depostis in Transit
When a deposit is made by the company, in one period but is not recored by the bank until the next period
Outstanding checks
When the company writes a check but the bank does not deduct it until it receives the check as payment
Net Realizable Value
The gross receivable less an allowance for uncollected accounts
Aging
A listing of accounts receivable in categories based on their ages
