Term
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Definition
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Term
| Cost of Goods Sold (COGS) |
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Definition
| Total cost of merchandise sold during the period |
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Term
| Perpetual Inventory System |
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Definition
| Determine the COGS each time a sale occurs. Maintain detailed records of the cost of each purchase and sale |
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Term
| Periodic Inventory System |
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Definition
Determine COGS at the end of the accounting period.
Beginning COGS + COG Purchased -COG on hand period end |
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Term
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Definition
| Document that includes total purchase price and other info |
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Term
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Definition
| Buyer pays freight costs, ownership transfers before shipment |
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Term
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Definition
| Seller pays freight costs, ownership transfers at delivery |
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Term
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Definition
| credit if paid by credit, cash if paid by cash |
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Term
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Definition
| Purchaser keeps merchandise if seller is willing to grant a price reduction |
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Term
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Definition
| Cash discount for prompt payment |
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Term
| Credit Terms - 2/10, n/30 |
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Definition
| 2% within 10 days of receiving invoice, otherwise due after 30 days |
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Term
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Definition
| Provides support in recording each sale (like a sales receipt) |
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Term
| Sales returns and allowances |
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Definition
| A seller either accepts a return or grants a price reduction |
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Term
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Definition
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Term
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Definition
| Gross Profit - operating expenses |
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Term
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Definition
| goods available for sale - ending inventory |
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Term
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Definition
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Term
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Definition
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Term
| Quality of Earnings Ratio |
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Definition
| Net cash by operating activities/net income |
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Term
| Cost of Goods Sold (COGS) |
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Definition
| (Beginning Inventory + purchases) - ending inventory |
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Term
| Weighted average unit cost |
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Definition
| cost of goods available for sale/total units available for sale |
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Term
| Inventory Turn Over Ratio |
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Definition
| COGS/Average Inventory -- how quickly a company sells its goods |
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Term
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Definition
| 365/Inventory Turnover ratio |
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Term
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Definition
| A dishonest act by an employee that results in personal benefit to the employee at the cost of the employer |
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Term
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Definition
| Opportunity, Financial Pressure, Rationalization |
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Term
| Sarbanes Oxley Act of 2002 |
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Definition
| All publicly traded U.S. corporations are required to maintain an adequate system of internal control - ensure that controls are reliable and effective. |
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Term
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Definition
| Methods and measures to safeguard assets, enhance reliability of records, increase operations efficiency, compliance with laws and regulations |
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Term
| 5 Components of Internal Control |
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Definition
| A control environment, risk assessment, control activities, information and communication, monitoring |
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Term
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Definition
| network of approvals by authorize individuals to ensure all disbursements by check are proper |
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Term
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Definition
| authorization form prepared for each expenditure in a voucher system |
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Term
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Definition
| a cash fund used to pay relatively small amounts |
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Term
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Definition
| comparing the banks balance with the company's balance, and explaining the differences to make them agree |
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Term
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Definition
| shows companies bank transactions and balances |
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Term
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Definition
| Non-sufficient funds check |
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Term
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Definition
+deposits in transit
-outstanding checks
bank errors |
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Term
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Definition
notes collected by banks
NSF checks
check printing for service charges
company errors |
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Term
| collection of notes receivables |
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Definition
debit: cash, miscellaneous expense
credit: notes receivable, interest revenue |
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Term
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Definition
debit: cash
credit: accounts payable |
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Term
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Definition
debit: accounts receivable
credit: cash |
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Term
| bank service charges entry |
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Definition
debit: miscellaneous expenses
credit: cash |
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Term
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Definition
| Amounts due from individuals and companies, claims that are expected to be collected in cash |
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Term
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Definition
| Amounts that customers owe on account |
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Term
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Definition
| claims for which formal instruments of credit are issued as evidence for debt |
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Term
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Definition
| Accounts receivable that becomes uncollectible. |
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Term
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Definition
| Charge the losses to the Bad Debt Expense |
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Term
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Definition
Debit: Bad Debts Expense
Credit: Allowance for Doubtful Accounts |
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Term
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Definition
| Estimates uncollectible amounts at the end of each period |
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Term
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Definition
| Face Value of Note x Annual Interest Rate x Time in terms of one year |
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Term
| Receivables Turnover Ratio |
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Definition
| Net Credit Sales/Average Net Receivables |
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Term
| Average Collection Period |
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Definition
| 365/Receivables Turnover Ratio |
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