Test 2 Ch 8

Question 1

working capital

Answer 1

excess of its current assets over its current liabilities (current assets - current liabilities)

Question 2

internal control

Answer 2

set of policies and procedures that directs how employees should perform a company’s activities; all of the related methods and measures adopted within an organization to safeguard its assets and enhance the accuracy and reliability of its accounting records

Question 3

outstanding check

Answer 3

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

Question 4

deposits in transit

Answer 4

deposits recorded by the depositor but not yet recorded by the bank

Question 5

non-sufficient funds

Answer 5

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

Question 6

Ending Inventory Function

Answer 6

(Beginning Inventory + Purchases) 
= Available
- Cost of Goods
=
Ending Inventory

Question 7

Gross Profit

Answer 7

Sales
- Cost of Goods Sold
= Gross Profit

Question 8

Retail Inventory method

Answer 8

Beginning Inventory
\+ Purchases
= Available
- Sales/CoGS
= Ending Inventory