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Related Flashcards
Related Topics
Cards In This Set
| Front | Back |
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Purpose of Internal Controls
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1. safeguarding company's assets
2. Improve accuracy & reliabilty of accounting info. |
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Control Activities
(2 TYPES) |
1.detective controls
2. preventive controls |
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Detective Controls
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Detect erros on fraud that already occurred
|
|
Preventive Controls
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Keep fraud and erros from happening
|
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Bank Reconciliation
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Connects company's cash balance to bank balance (by identifying differences due to timing and errors
|
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Items on book side of bank reconciliation require:
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Journal entries
(Bank side doesnt) |
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Accounts Recievables
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-amounts colletible from customers
|
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Uncollectible Accounts
(2 Methods) |
-allowence
-direct write off |
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Allowence Method
|
-best way to estimate bad debts
-records uncollectible accounts based on compnay's collection expense. |
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% of sales
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Income statement approach
|
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Aging of recievables
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Balance sheet approach
|
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Direct write off method
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Records expense when specific account is determined to be uncollected
|
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Notes Recievables
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A written promise to pay sum at specific date (more formal)
also called promisory notes! |
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Gross Profit formula
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Gross Profit= Sales Revenure - cost of goods sold
|
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Inventory costing methods (4)
|
1. LIFO
2. FIFO
3. Average 4. Specific Unit |
