Financial Accounting; Test 3; Chapter 7-9
Quiz yourself by thinking what should be in
each of the black spaces below before clicking
on it to display the answer.
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| A ____ is a dishonest act by an employee that results in personal benefit to the employee at a cost to the employer. | show 🗑
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| show | Opportunity, Financial Pressure, & Rationalization
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| show | Opportunity
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| show | Financial Pressure
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| ___ is when employees try to justify fraud because they believe they deserve to be paid more. | show 🗑
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| The Sarbanes Oxley-Act internal control requirements are (5): three are listed here | show 🗑
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| The Sarbanes Oxley-Act internal control requirements are (5): two are listed here | show 🗑
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| The Internal Control components are (5): | show 🗑
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| show | A control environment
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| __ ___ means that the company must identify & analyze the factors that create risk & determine how to manage these risks. | show 🗑
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| ___ ___ means that management must design policies & procedures to address risks. | show 🗑
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| __ __ ___ means that the system must capture & communicate all pertinent information to appropriate parties. | show 🗑
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| show | Monitoring
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| The principles of control activities are (6): | show 🗑
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| show | Establishment of responsibility
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| show | Segregation of duties
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| show | Documentation procedures
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| show | Physical controls
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| Most systems of internal control provide for __ __ __. This principle involves the review, comparison, & reconciliation of data prepared by employees. It is often assigned to internal auditors. Daily cash counts are made by department supervisors. | show 🗑
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| show | Human resource controls
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| Know the steps to bank reconciliation, what to deduct/add per bank/book balance. | show 🗑
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| __ is recorded in both the balance sheet & statement of cash flow. The balance sheet reports this amount available at a given point in time: on hand, in bank, & petty. The statement of cash flow shows the source & use of it during a period of time. | show 🗑
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| __ __ are highly liquid investments that can be converted into specific amounts & typically have matures of three months/less when purchased. | show 🗑
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| Three parties to a check are: | show 🗑
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| The ___ is the drawer who issues the check. | show 🗑
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| The __ (payer) is on which the check is drawn. | show 🗑
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| show | Payee
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| show | Electronic Funds Transfer
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| The different types of receivables are (3): | show 🗑
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| __ __ is amounts owed by customers on account. | show 🗑
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| show | Recognizing, Valuing, & Disposing of accounts receivable.
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| __ __ are claims for which formal instruments of credit are issued. | show 🗑
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| __ __ are non-traded. Examples are interest receivable & advances to employees. | show 🗑
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| Under the __ __-__ __, bad debt losses are not anticipated, & no allowance account is used; Bad Debt Expense will show only actual losses from uncollectible; & unless bad debt losses are insignificant, this method is not acceptable for reporting purposes. | show 🗑
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| __ __ __ are credit losses as debits to it/Uncollectible Accounts Expense. Such losses are a normal & necessary risk of doing business on a credit base. | show 🗑
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| show | Allowance Method
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| The __ __ excludes amounts that the company estimates it will not collect. Thus, this method reduces receivables in the balance sheet by the amount of estimated uncollectible receivables. | show 🗑
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| Companies sell receivables for two major reasons: | show 🗑
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| show | Maturity date
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| The __ __ specified in a note is an annual rate of interest. | show 🗑
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| show | Face Value of Note X Annual Interest Rate X Time in Terms of One Yr = Interest
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| __ __ is a negotiable instrument that can be transferred to another party by endorsement. | show 🗑
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| show | current assets
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| show | Financial ratios
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| show | accounts receivable turnover ratio
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| show | Percentage of Sales & Percentage of Receivables
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| __ __ __ matches Sales to Bad Debt Expense on the Income Statement & this approach better matches expenses with revenues. | show 🗑
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| __ __ __ emphasizes the cash realizable value between Accounts Receivable & Allowance for Doubtful Accounts on the Balance Sheet. | show 🗑
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| show | Allowance for Doubtful Accounts; Accounts Receivable
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| show | Bad Debts Expense; Allowance for Doubtful Accounts
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| show | Land
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| show | Land cost
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| show | Land improvement cost
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| __ __ includes: cash purchase price, certain related cost, sales tax, freight charges, & insurance paid by the purchaser during transit. | show 🗑
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| show | 100% / years = annual rate of deprecation
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| show | 100% / years * 2 = double declining rate
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| show | Straight-line method
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| show | Cost - Salvage Value = Depreciable cost / Useful Life (years) = Annual Deprecation Expense
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| show | Units-of-activity method
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| Follow this formula to compute the units-of-activity method: | show 🗑
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| The __-__ __ produces a decreasing annual deprecation expense over the asset's useful life & is compatible with the matching principle because the higher deprecation in early years is matched with the higher benefits received in these years. | show 🗑
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| Follow this formula to compute the declining-balance method: | show 🗑
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| show | plant assets
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| __ __ are rights, privileges, & competitive advantages that result from the ownership of long-lived assets that do not possess physical substance. They may arise from government grants, acquisition of another business, & private monopolistic arrangements. | show 🗑
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| show | Patents, Copyrights, Trademarks, Franchise, & Goodwill
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| A __ is an exclusive right issued by the office that enables the recipient to manufacture, sell, or otherwise control an invention for a period of 20 years from the date of grant. | show 🗑
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| show | Copyrights
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| A __ or __ __, is a word, phrase, jingle, or symbol that identifies a particular enterprise or product. | show 🗑
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| A ___ is a contractual arrangement under which the franchisor grants the franchisee the right to sell certain products, render specific services, or use certain trademarks or trade names, usually restricted to a designated geographical area. | show 🗑
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| __ is the value of all favorable attributes that relate to a business enterprise, includes: exceptional management, desirable location, good customer relations,&skilled employees. It cannot be sold individually & is not amortized. Largest intangible asset | show 🗑
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| show | Deprecation
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| ___ is the process of allocating the cost of a natural resource to expense in a rational & systematic manner. | show 🗑
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| show | Total Cost minus Salvage Value / Toal Estimated Units = Depletion Cost per Unit X Number of Units Extracted & Sold = Annual Depletion Expense
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| __ is the process of allocating the cost of intangible asset to expense in a rational & systematic manner. | show 🗑
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| Know how Land, Land Improvements, Equipment, Natural Resources, & Intangible assets are presented on the Balance Sheet. | show 🗑
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