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ACCT 427

Flow charts are read from... top to bottom and left to right
in a flow chart the rectangle symbolizes a computer process
the entity that perform the action is named at the... top of the page
a ... is an on-page indicator circle
documents from the 2nd phase of the expenditure cycle include the... purchase order, packing slip, and receiving report
the second phase of the revenue cycle is handled by the... shipping department
documents from the fourth phase of the revenue cycle (cash collections) include... remittance list, remittance advice, checks, and copies of checks the third phase of the revenue cycle billing
...ensures that subledgers agree with control accounts reconciliation
...increases efficiency in the warehouse inventory management RFID
sequential numbering of the invoices is an example of a control in the ... phase of the revenue cycle third(billing)
primary objective that suggests you audit from financial statements to source documents validity
...helps cut down on input errors by automatically transferring known data XPRL
the primary objectives of controls are accurate, valid, authorization, and completeness
...responsible for recording adjusting entries controller
five categories of adjusting entries are... accruals, deferrals, reevaluations, estimations, and corrections
just-in-time inventory systems are most concerned with... the scheduling of deliveries
the final step in the GL reporting system is to produce... managerial reports (comes after producing financial statements)
... is journalized in the payroll journal payroll
primary purpose of AIS to provide useful information to decision makers
employee accounts are... master files
GP will treat transaction dates...from batch dates different
when you close something and people cant book entries anymore, this is classified as a(n)... control
...used for anything that is non financial like square footage unit account
flow into the financial statements (control) posting
...are a great way to get information to decision makers reports
details on the...allow us to make sure that all month end entries were made trial balance
...allows you to go from source document all the way to where it shows in the financials, allowing us to track all the way through the systems audit trail
...records transactions and captures initial sales- the original point of entry journals specific to transactions ledger
the common type of journals are... cash disbursement, cash receipts, sales, purchases, payroll, and general
...keeps track of detail subsidiary ledger
you always post JOURNALS...LEDGERS
...has specific columns set up for specific entries sales journal
...are entries entered into the sales journal sales made on credit when the transaction took place date who was invoiced customer
...uniquely identifies them and connects them to the subsidiary ledger customer number
you post sales journals to the general ledger by... totaling it and posting it periodically
sales journals...double entry accounting follows
date, account number, name/description, debit, credit, reference... make up the general journal
...are types of entries in the general journal infrequent unusual entries, accruals, deferrals, closing, and adjusting
accruals, deferrals, estimates, error corrections, and reevaluations are all types of... adjusting entries
...has the control accounts and post to it from the primary transactions that are found in the... general ledger...general journal
...update accounts adjusting entries
adjusting entries are posted to the... general ledger
some examples of adjusting entries are... BDE, prepaid expenses, unearned revenue, depreciation, change in accounting principal
nominal accounts are...and reset for the next period closed out the order that financial statements are prepared earnings, retained earnings, balance sheet, find changes to cash flow
taking balances and posting them, reconciling them, doing adjusting entries, closing entries, and payroll are all... month end procedures that need to be performed at a company
reconciliation and printing a trial balance are... controls in the monthly procedures
...should be adjusted monthly accrued benefits, depreciation, prepaidsm and interest
journal entries required for month end procedures should be booked... in the general journal and posted individually and then adjusted and fixed next period the extensible business reporting language XBRL useful because it has automation cost savings, its faster, has less errors, and is more efficient and effective XBRL
sales order entry, warehouse and shipping, billing for shipped goods and cash collections are all... steps for the revenue cycle (seller)
request goods, order goods, receive goods, approve vendor invoice, and pay for goods ordered are all... steps for the expenditure cycle (buyer)
our organization is TAMU. list some things that TAMU needs to collect information about. we will categorize into three main areas which are... resources, agency, events
analytical technique used to describe some aspect of an information system in a clear, concise, and logical manner flowchart
use a standard set of symbols to pictorially describe transaction processing procedures flowcharts
purpose of to minimize the liklihood of an incomplete or ineffective accounting system flowchart
purpose of to provide a record for training new employees flowchart
purpose of to assist in making improvements to the system flowchart
purpose of to provide information for accounting personnel to communicate with other personnel about the system flowchart
purpose of to improve communication with those outside the firm about the sytems flowchart (example: external audit)
...are necessary tools for accountants documentation techniques
...require that auditors understand the automated and manual procedures an entity uses; can be gleaned through documenting the internal control system--effecively exposes strengths and weaknesses SAS-94
effectively requires that publicly traded corporations and their auditors document and test the companys internal controls SOX
promulgated by the PCAOB requires that the external auditor express an opinion on the clients system of internal controls auditing standard number 5
combine symbols and flowlines with areas of responsibility
illustrates the flow of documents and information between areas of responsibility within an organization document flowchart
useful in analyzing the adequacy of control procedures document flowchart
flowcharts that describe and evaluate internal controls internal control flowcharts
depict the relationship among input, processing and output of AIS system flowchart
begins with identifying, both inputs that enter the system and their origins, followed by the processing portion of the flowchart. the resulting new information is the output component system flowchart
important tool of system analysis, design, and evaluation system flowchart
describe the specific logic to perform a process shown on a systems flowchart program flowchart
connects the symbols and indicates the sequence of operations flow line
represents a data movement or arithmetic calculation processing symbol
types of flowcharts document, system, program
represents a comparison of one or more variables and the transfer of flow to alternative logic paths decision symbol
all points where the flow begins and ends are represented by the... terminal symbol
with flowcharts , always have a...and...for each document origin...terminal
keep flowcharts...and... uncluttered...clean
within each column, there must be at least one...,...or...between documents manual process, keying operation, or file
when moving from one column to another, show a document at...of the flow line both ends
the only way to a computer file is through a... computer processing rectangle
do not use file a document manual process
four key activities to the revenue cycle sales order entry, shipping, billing, cash collection
take order, check credit, check inventory, respond to inquiries are all steps in the... sales entry
take the order: electronic data interchange and edit checks sales order entry
validity checks, completeness checks, reasonable checks edit checks
credit approval, check inventory, respond to inventories order entry
purchase order and sales order sales order document
picking ticket, radio frequency identification(RFID) pick and pack the order (shipping)
packing slip, bill of lading, shipping notice ship the order (shipping)
invoicing, updating accounts receivable billing
...function reports to the controller accounts receivable
...function debits the customer accounts for the amount the customer is invoiced and credits customer accounts for the amount that the customer pays accounts receivable
two basic ways to maintain accounts receivables is open-invoiced and balance forward methods
customer pays according to invoice and two copies are typically sent to the customer open invoice method
turnaround document remittance advice
conducive to offering early payment discounts and results in more uniform flow of cash collections are both advantages of the open invoice methof
more complex to maintain is a...of the open invoice mehod disadvantage
customer pays according to the amount on their monthly statement balance forward method
the...portion of the balance forward method includes pre printed information with the customers name, account number, and balance tear off
in a balance forward method, remittances are applied against the...rather than against a specific invoice total balance
its more efficient and reduces costs because you dont bill for each individual sale and its more convenient for the customer to make one monthly remittance are both advantages of... the balance forward method
adjustments to customer accounts may need to be made for... returns, allowances for damaged goods, or write offs as uncollectibles
adjustments are handled by the... credit manager
if there is a...the credit manager receives confirmation from the receiving dock and then issues a credit memo which authorizes crediting to customers account return
one copy to accounts receivable and one to the customer distribution of credit memos
sales order/pick list, bill of lading, invoices, credit memos, monthly statements and remittnace billing documents
the...handles customer remittance and deposits them in the bank cashier
because...are soo highly vulnerable, controls should be in place to discourage theft cash and checks
...should not have access to cash accounts receivable personnel
remittance list, deposit slip, copy of check and stub, remittance advice, check and stub documents in cash collections
in the revenue cycle, a...should provide adequate controls to ensure certain objectives are met well designed AIS
sales threat number 1 incomplete or inaccurate customer order
why is inaccurate or incomplete customer orders a threat? its inefficient and causes dissatisfaction
controls to ensure inaccurate or incomplete customer orders are minimized data entry controls, automatic lookup of reference data, reasonable tests comparing quantity ordered to past history
sales threat number 2 sales to customer with poor credit
why is sales to customer with poor credit a threat sales may be uncollectible resulting in lost assets
controls to ensure sales to customers with poor credit is minimized follow proper authorization, sales people should have read only access, credit should be approved prior to releasing goods, accurate records of customer balances
sales threat number 3 orders that are not legitimate
why is orders that are not legitimate a threat cant make good credit decisions
controls to ensure orders that are not legitimate are minimized establishing a receipt of a signed purchase order, requiring three digit code on back of credit card, requiring paypal, sending emails to confirm
sales threat number 4 stockouts, carrying costs, and markdowns
why ar estockouts, carrying costs, and markdowns a threat you run out of merchandise, you could lose sales and if you carry too much merchandise, youll have high carrying costs and have to mark down inventory to sell
controls to ensure that stockouts, carrying costs, and markdowns are minimized accurate inventory control and sales forecasting systems, online inventory systems, periodic inventory counts, regular review of sales forecasts
shipping threat number 1 shipping errors
why are sipping errors a threat customer dissatisfaction and lost sales may occur, shipping to the wrong address
controls to ensure shipping errors are minimzed require shipping clerks to enter quantities, use bar code scanners and RFID tages, if performed manually-application controls, packing slip and bill of lading should not be printed until accuracy is verified
shippinf threat number 2 theft of inventory
why is theft of inventory a problem loss of assets and inaccurate inventory records
controls to ensure theft of inventory is minimized kept in a secure locations, transfers should be documents, inventory should be released for shipping only when approved, employees should sign documents or enter codes so losses can be traced, wireless communication and RFID tags, counting inventory
billing and AR threat number 1 failure to bill customers
why is failure to bill customers a threat loss of assets and revenues, inaccurate data on sales
controls to ensure that failure to bill customers is minimized segregate shipping and billing functions, sales order picking tickets packing slips and sales invoices should be sequentially numbered and accounted for, ensure that every shipment is recorded
billing and AR threat number 2 billing errors
why is billing errors a threat loss of assets if under bill and customer dissatisfaction if over bill
controls to ensure billing errors are minimized have computer retrieve prices from master file, avoid quantity errors by checking packing slip against sales order, bar code scanners
billing and AR threat number 3 errors in maintaining customer accounts
why is errors in maintaining customer accounts a threat leads to customer dissatisfaction and loss of sales, may indicate theft of cash
controls to ensure errors in maintaining customer accounts is minimzed edit checks, batch totals, compare number accounts with checks, reconciliations, sending monthly statements
cash collections threat number 1 theft of cash
why is theft of cash a threat loss of cash
controls to ensure theft of cash is minimzed segregation of duties , minimizing handing of money and checks through lockbox, prompt documentation and restrictive endorsement of remittance, deposit all remittance in bank daily, have reconciliation done by ind. party
Created by: Bright265
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