Terms
A check for which the bank account has inadequate funds to pay the check
What is a non-sufficient funds (NSF) check
A technique used to reduce inventory storage where a company does not begin manufacturing something until they have an order for it
What is Just-in-Time (JIT) inventory
A method of estimating uncollectible receivables by determining the balance of the Allowance for Bad Debts account based on the age of individual accounts
What is aging-of-receivables method
Principal amount plus interest due
What is maturity amount
A written promise to pay a specified amount of money at a future date
What is a promissory note
A document explaining the reasons for the difference between the cash balance in the ledger and the cash balance in the bank account
What is a bank reconciliation
A count of all good on hand to determine the actual amount of ending inventory
What is a physical count
The allowance method based on the idea that a given percent of a company's credit sales for the period is uncollectible
What is the percent of sales method
ABC company borrowed $11,000, two year note, at an annual interest of 7%. What amount is debited to Notes Payable on the date of maturity
What is $11,000
The loss of merchandise through theft or breakage
What is inventory shrikage
Short-term, highly liquid investments
What are cash equivalents
Title of inventory remains with the seller while goods are in transit
What is FOB destination
Provides details about the individual items comprising the balance in accounts receivable
What is accounts receivable subsidiary ledger
The maturity value of a 60 day note for $750,000 at 7% interest.
What is $758,630
This ledger lists customers in alphabetical order along with the amounts they owe
What is accounts receivable subsidiary ledger
Starts with using cash to purchase merchandise and ends with collecting cash from customers
What is the operating cycle
Sales of $235,600, Cost of inventory is $175,400, Gross profit is
What is $60,200
The accounting principle that requires the use of the allowance method of accounting for bad debts
What is the matching principle
Total interest expense for a 6-month note for $17,000 at 8%
What is $680
The difference between net sales and the cost of goods sold
What is gross profit
Principle x interest rate x time =
What is amount of interest
Journal entry required every time a sale of merchandise is made
What is Debit Accounts Receivable, Credit Sales Revenue and Debit Cost of Goods Sold, Credit Inventory
A contra asset account with a balance approximating the amount of accounts receivables expected to be uncollectible
What is allowance for doubtful accounts
A $30,000 three-month note at 7% is issued on Dec. 1st. What is the amount of accrued interest on Dec. 31.
What is $175
A system of accounting for inventory where the inventory and Cost of Goods Sold accounts are updated automatically every time a barcode is scanned
What is a perpetual inventory system