Ch 5 Accounting For Merchandising Operations

Companies use a petty cash fund to pay relatively small amounts.
A. True
B. False – TRUE
Accounts receivable – Amount due from customers arising from the sale of a good and service on credit
Sunk Cost – Management does not have an option; a cost that is already paid and cannot be recovered by a decision made now or in the future
Allowing only designated personnel to handle cash receipts is an example of
A. establishment of responsibility.
B. segregation of duties.
C. documentation procedures.
D. independent internal verification. – A
83. Independent auditors express an opinion on the:
A. Fairness of financial statements.
B. Amount of income taxes a company owes to the government.
C. Quality of the company's products.
D. Quality of a company's workforce. – A. Fairness of financial statements.
Equities – Finical rights of the assets
Credit – An entry on the right side of an account.
Closeout – The process by which a Federal awarding agency determines that all applicable administrative actions and all required work of the award have been completed by the recipient and Federal awarding agency.
ALL Expenses – …Are a Debit balance account.
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Certified Public Accountant – An individual certified to practice public accounting in a state
a sale for which payment will be received at a later date – sale on account
Book Value of Asset – The difference between the cost of a depreciable asset and its related accumulated depreciation.
TEST!! Petty cash – Small amount of cash we use to pay non occurring expenses
Other controls – Bonding, rotation of duties, required periodic vacations.
profit and loss account – Gewinn & Verlust
Minimum requirement for current ratio – 2:1
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The left side of the standard account is called the – Debit side
work sheet – columnar accounting form used to summarize the general ledger information needed to prepare financial statements
Adjusting Entries. – Entries made at the conclusion of a fiscal period to bring accounts up to date.
Transaction Analysis. – The effect of transactions on the accounting elements.

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