Exam 3 Flashcards
ownership of the goods passes to the buyer when the public carrier accepts the goods from the seller
FOB shipping point
ownership of the goods remains with the seller until the goods reach the buyer
FOB destination
who pays shipping charges in FOB shipping point?
buyer pays freight costs
who pays shipping charges in FOB destination?
seller pays freight costs
holding the goods of other parties and trying to sell the goods for them for a fee, but without taking ownership of the goods
consigned goods
how consigned goods affect inventory
not included in seller’s inventory because seller does not own it
goods in transit affect on inventory
should be included in the inventory of the company that has legal title to the goods
inventory turnover ratio
cost of goods sold / average inventory (beginning + ending / 2)
days in inventory
365 / inventory turnover ratio
what causes inventory turnover to increase?
low days in inventory, minimal amount of inventory on hand at any one time, means they have minimal funds tied up in inventory, there is such a thing as having too low of an inventory
lowest cost of goods sold
FIFO
highest cost of goods sold
LIFO
highest ending inventory
FIFO
lowest ending inventory
LIFO
Which situation requires a departure from the cost basis of accounting to the lower-of-cost-or-market basis in valuing inventory?
a decline in the value of inventory
company employees who continuously evaluate the effectiveness of the company’s internal control systems
internal auditors
the costs of establishing controls should not exceed their expected benefit
reasonable assurance
For what purpose are physical controls used in a business?
To enhance the accuracy and reliability of its accounting records and to safeguard its assets
requires all publicly traded U.S. companies to maintain an adequte system of internal controls
the sarbanes-oxley act
different individuals are responsible for related activities
segregation of duties
What is an authorization form called which is prepared for each expenditure in most medium and large organizations?
voucher
When is the petty cash fund replenished?
Both at the end of an accounting period and when there is not enough cash to cover future withdrawals
A check is written to replenish a $100 petty cash fund when the fund contains $3 of cash and $94 of receipts. Which of the following is one part of the entry to be used in recording the check to replenish?
cash over and short will be debited for $3
What does IFRS require as it relates to internal controls of foreign companies listed on U.S. stock exchanges?
There are no internal controls required for foreign companies listed on U.S. stock exchanges.
There are no internal controls required for foreign companies listed on U.S. stock exchanges.
close to 50%
In the PWC study conducted in 2005, what are the average losses by companies impacted by fraud?
losses that average 1,700,000
