Term
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Definition
| amount of time from the purchase of inventory until it is sold and payment is collected, less the amount of time creditors give the company to pay for inventory |
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Term
| Perpetual Inventory System |
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Definition
| continuous records are kept of the quantity and usually the cost of individual items as they are bought and sold |
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Term
| Periodic Inventory System |
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Definition
| The inventory not yet sold, or on hand, is counted periodically |
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Term
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Definition
| involves an actual count of all merchandise on hand |
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Term
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Definition
| quote prices as a percentage off their list or catalog prices |
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Term
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Definition
| intended to increase the seller's liquidity by reducing the amount of money tied up in accounts receivable |
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Term
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Definition
| discounts that a buyer takes for the early payment of merchandise |
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Term
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Definition
| buyer bears the shipping cost |
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Term
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Definition
| seller bears the transportation costs to the point where the merchandise is delivered |
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Term
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Definition
| When the buyer pays the transportation charge |
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Term
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Definition
| seller pays the transportation charge |
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Term
| Cost of Goods Available for Sale |
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Definition
| total cost of merchandise that could be sold in the accounting period |
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Term
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Definition
| cost of merchandise actually sold |
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Term
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Definition
| sum of net purchases and freight-in |
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Term
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Definition
| total purchases less any deductions, such as purchases returns and allowances, as well as discounts |
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Term
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Definition
| created by management's overall attitude, awareness, and actions |
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Term
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Definition
| identifying areas in which risks of loss of assets or inaccuracies in accounting records are high so that adequate controls can be implemented |
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Term
| Information and Communication |
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Definition
| accounting system established by management |
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Term
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Definition
| policies and procedures management puts in place to see that its directives are carried out |
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Term
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Definition
| management's regular assessment of the quality of internal control |
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Term
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Definition
| approval of certain transactions and activities |
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Term
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Definition
| controls that limit access to assets |
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Term
| Periodic Independent Verification |
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Definition
| someone other than the persons responsible for the accounting records and assets should periodically check the records against the assets |
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Term
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Definition
| no one person should authorize transactions, handle assets, or keep records of assets |
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Term
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Definition
| process of carefully checking an employee's background and insuring the company against theft |
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