I
This accounting method records revenue when earned and expenses when incurred, not when cash moves.
What is accrual accounting.
This is the reason assets are listed in this specific order on the balance sheet.
What is liquidity.
This type of auditor works for the company and focuses on internal controls and processes.
What is an internal auditor.
These types of costs — such as installation, shipping, and taxes — are added to the cost of a long‑term asset.
What are all costs necessary to get the asset ready for use.
This financial statement proves the accounting equation is in balance.
What is the Balance Sheet.
Under accrual accounting, this is when revenue is recorded — even if cash hasn’t been received yet.
What is when it is earned.
This asset is almost always listed first because it is the most liquid.
What is Cash.
This type of auditor works for an outside firm and provides an independent opinion on the financial statements.
What is an external auditor.
This is the term for recording a long‑term asset on the balance sheet instead of expensing it immediately.
What is capitalizing the asset.
This account is debited when a company records a sale on account.
What is Accounts Receivable.
Under accrual accounting, this is when expenses are recorded — even if cash hasn’t been paid yet.
What is when they are incurred.
These adjustments go on the bank side of the bank reconciliation.
What are deposits in transit and outstanding checks.
This term describes when two or more employees work together to override internal controls.
What is collusion.
This method is used when a company owns more than 50% of another company.
What is the Consolidated method.
This account is credited when a company records a sale on account.
What is Sales Revenue.
This principle allows accountants to ignore small amounts that won’t affect a user’s decision.
What is the Materiality Principle.
These adjustments go on the book side of the bank reconciliation.
What are NSF checks, bank fees, EFTs, and company errors.
his method estimates uncollectible accounts by applying percentages to different age categories of receivables.
What is the Aging of Receivables method.
This term describes the combined financial statements of a parent and its subsidiary.
What are consolidated financial statements.
Deposits in transit and outstanding checks belong to this side of the bank reconciliation.
What is the bank side.
This concept explains why a company might expense a $12 stapler instead of capitalizing it.
What is materiality.
Only adjustments on this side of the reconciliation require journal entries.
What is the book side.
Under the Aging of Receivables method, this account is adjusted to the desired ending balance.
What is Allowance for Doubtful Accounts.
This is the journal entry to record a sale “on account.”
What is: Debit Accounts Receivable, Credit Sales Revenue.
NSF checks, bank service charges, and EFT payments belong to this side of the bank reconciliation.
Answer: What is the book side.