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Accounting Ch 7
Kimmel
13
Accounting
Undergraduate 3
10/29/2013

Additional Accounting Flashcards

 


 

Cards

Term
Sarbanes Oxley Act
Definition
corporate execs and board of directors must make sure there areinternal controls

independent outside audits

PCAOB

Investors trust companies that use this, managers find it helpful
Term
Internal Control Aims to
Definition
safeguard assets
enhance reliability of acct record
increase efficiency
ensure compliance w laws
Term
Five Main Components of IC
Definition
control environment
risk assessment
control activities
information and communication
monitoring
Term
Principles of Internal Control
Definition
Est. of Responsibility
(only one person is responsible for a given task)

Segregation of Duties
(to detect of prevent irregularities in performance of an employee’s duties (records vs physical assets)

Documentation Procedures

Physical Controls

Independent Internal Verification
(review, comparison, etc of data prepared by employees)

Human Resource Controls
Term
Limitations of Internal Control
Definition
Costs shouldn’t exceed benefits “reasonable assurance”

Human element (two may work together)

Size of business
Term
Mail Receipts
Definition
Opened by two people

Each mail clerk signs the list

Original copy of lists and checks sent to cashiers & acct dept
Term
Cash Disbursements are more effective when
Definition
EFT
Term
Bank Reconciliation
Definition
Transactions that need to be adjusted (errors or time lag)

outstanding checks

deposits in transit

charges for NSF Checks

credits for interest earned

misc debt etc
Term
Cash Terms
Definition
Cash (even VISA ETC)

Cash Equiv: investements that mature within 90 days

Restricted Cash: for use of loan requirements

Lines of Credit (only when the entity draws on this acct is it a liability)
Term
Principles of Cash Management
Definition
Increase collection of receivables

Keep inventory low

Monitor payment of liabilities

Plan major expenditures

Invest idle cash

Anticipate adequate cash for operations
Term
Voucher System
Definition
network of approvals by authorized indiv. to ensure check disbursements are proper
Term
outstanding checks
Definition
deduct balance per bank
Term
deposits in transit
Definition
add balance per bank
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