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25 Cards in this Set

  • Front
  • Back
what are the limitations of internal control?
-human element
-cost/ benefit analysis
-collusion
-size of business
type of internal control that involves prenumbering and prompt delivery of documents
documentation procedures
type of internal control that involves someone outside the system verifying the books periodically
independent internal verification
type of internal control that insures the business against misappropriation of an asset by dishonest employees
bonding of employees
type of internal control where the work of 1 employee should provide reliable basis for the work of another employee
segregation of duties
type of internal control where only 1 person is responsible for a given task
establishment of responsibility
what are the two ways to fix the bank's statement
Add deposits in transit
subtract outstanding checks
what are the 3 ways to fix the book's statement
add collection of notes receivable
subtract NSF check
subtract bank service charge
what is the adjusting entry for collection of Notes Receivable
debit cash
credit Notes receivable
what is the adjusting entry for NSF check
debit Accounts Receivable
credit cash
what is the adjusting entry for bank service charge
debit miscellaneous expense
credit cash
what is the entry for estimating uncollectible accounts
debit bad debt expense
credit Allowance for Doubtful Accounts
what is the entry for the write off of an uncollectible account
debit Allowance Doubtful accounts
credit Accounts Receivable
what is the cash realization value before and after write off
before = Accounts receivable -allowance DA

after = Accounts receivable + allowance DA
what is the entry for a receivable that is deemed uncollectible?
2 entries :

debit Accounts Receivable
credit Allowance DA

debit cash
credit Accounts receivable
receivable turnover rate =
net credit sales / average net receivables
Average collection period =
365/ receivable turnover ratio
what is the entry to convert for Accounts receivable to notes receivable ?
debit Notes Receivable
credit Accounts receivable
what is the entry for the sale of accounts receivable to a factor
debit cash
debit service charge expense
credit accounts receivable
what does the cost of land include? (5 things )
1. cash purchase price
2. closing costs - title fees, attorney fees
3. brokers commissions
4. accrued property tax
5. all necessary costs in making land ready for use
what is involved in the cost of constructing a building? (5)
1. contract price
2. architect's fees
3. building permits
4. excavation costs
5. interest costs during construction
book value =
cost - accumulated depreciation
what is the entry for the retirement of an asset?
debit depreciation expense
credit accumulated depreciation
all favorable attributes that relate to a business enterprise including
-exceptional management
- desirable location
- good customer relations
-skilled employees

only recorded when entire business is purchased
= excess of cost/ fair market value of net assets acquired
goodwill
what is the entry to record sales tax recorded by retailer
debit cash
credit sales
credit sales tax payable