The time it takes the business to start with cash, purchase inventory, sell the inventory, and finally collect the cash from customers
What is Operating Cycle
100
The 2 types of inventory systems
What are perpetual and periodic
100
Accounting Information Systems have 5 principles and are designed to do these 3 things:
What are:
1) Collect and process data from transactions and events
2) Organize them in useful reports
3) Communicate results to decisions makers
100
This system consists of policies and procedures designed to
1) Protect assets.
2) Ensure reliable accounting.
3) Urge adherence to company policies.
4) Promote efficient operations.
What is an internal control system
Bonus - for whom is this required?
100
The count always wins, we record any difference to what account?
What is COGS (Inventory Shrinkage)
200
When a 2% discount is offered for paying within 10 days a company is offering this.
What is a cash discount.
200
Inventory cost includes all expenditures necessary to bring an item to a salable condition and location. This includes
What is
Purchase price + shipping costs (if FOB shipping pt & paid by the buyer) +insurance + storage - purchase discounts - R&A
200
Special Journals are required - True or False?
False
200
When cash in the register doesn't match our sales tape we record the difference to this account
What is cash over/short
200
This principle requires a company to use the same inventory costing method from year to year.
What is the consistency principle
300
When goods are shipped with these terms, the seller owns them until they arrive
What is FOB Destination
Bonus - how does the seller record the costs?
300
The primary objective of inventory accounting
What is the matching principle
Bonus - In general which method follows the matching principle?
300
This is a listing of individual accounts and amounts with a common characteristic.
What is a subsidiary ledger
300
To pay for small items a company usually uses this
What is petty cash
300
The understatement of the ending inventory balance causes what to happen to COGS
What is Overstatement of COGS and Understatement of Net Income
400
(Net Sales-COGS)/Net Sales =
What is Gross Profit Ratio or Gross Margin Ratio
400
Four choices for inventory costing
What are LIFO,FIFO, W.A. and Specific ID
400
Cash payments should be recorded in this journal
What is the cash disbursements journal
400
One of the best internal controls for cash
What is a bank reconciliation
400
GAAP requires that inventory be reported as this.
What is the Lower of Cost or Market (LCM)
500
Beginning Inventory + Net Purchases =
What is Cost of Goods Available.
Bonus - This is also = to what?
500
In a period of rising prices, this method yields the highest net income.
What is FIFO
500
This accounting information system principle requires that a company accounting system conform with a company's activities, personnel, and structure.
What is compatibility principle
500
On the bank reconciliation there is a NSF check for $250. The entry to record this is what?