Exam III - Fairchild Flashcards
examples of internal controls
- control environment
- risk assessment
- control activities
- information and communication
- monitoring
internal controls
policies and procedures implemented by an organization to ensure their financial reports are reliable, efficient, and activities are compliant with laws and regulations
why are internal controls important?
to assure that company complies with federal and state laws and regulations in managing financial information and data
ADA
allowance for doubtful accounts
BDE
bad debt expense
NRV
net realizable value
FIFO
first in, first out
LIFO
last in, first out
unqualified opinion
an independent auditor has judged a company’s financial statements to be fair and appropriately represented (good, no excuses)
qualified opinion
an auditors opinion that the financials are fairly presented, with the exception of a specified area (I need to make excuses to give you your assessment on qualifications)
what is the nature of ADA?
it is a contra asset, because it reduces the amount of an asset, in this case the AR
what is the nature of AR?
it is a current asset
AR turnover ratio:
net accounts receivable
current asset/liability
less than a year
longterm asset/liability
more than a year
