Term
| Why should a company use internal controls? |
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Definition
-encourage adherance to company policies
-promote operational efficiency
-minimize errors and theft
-enhance the reliability and accuracy of accounting data |
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Term
| What are the two approaches to estimating future bad debts. |
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Definition
The income statement method uses a percent of credit sales as an estimation.
The balance sheet approach uses the net realizable value of the accounts receivable as an estimation. |
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Term
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Definition
| A formal credit arrangement in which the borrower recieves the face amount on the note. At maturity they repay the face amount plus the stated interest amount. |
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Term
| Non-interest bearing note |
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Definition
| A formal credit arrangement in which the borrower recieves the face amount of the note less the stated discounted amount. At the maturity date they repay the face amount. |
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