Internal Controls & Cash
A company's ability to pay its short term obligations, or to be able to pay its bills.
Liquidity
As asset used to pay for small dollar items
Petty Cash
Amounts due from customers for credit sales
Accounts Receivable
A written promise to pay a specified amount of money, usually with interest at a future date.
Promissory Note
Cash and similar assets are known as what
Liquid Assets
Journal entry to establish Petty Cash
Debit Petty Cash
Credit Cash
Bad Debt Expense
Amount charged for using money until its due date
Interest
Short-term highly liquid investment assets are known as what?
Cash Equivalents
Deposits made in the depositor's records but not yet recorded on the bank statement
Deposits in Transit
Contra Asset account used to offset Accounts Receivable
Allowance for Doubtful Accounts
Formula to calculate simple interest
P x R x T
Principal x Rate x Time
Consists of policies and procedures managers use to protect assets, ensure reliable accounting, promote efficient operations, and urge adherence to company policies.
Internal Control System
Checks written and deducted by depositor, but not yet received or deducted by the bank.
Must be subtracted from the bank statement side
Outstanding Checks
This method matches the estimated loss from uncollectible accounts receivable against the sales they helped produce.
Allowance Method
The person to whom a note is payable
Payee
Requires managers and auditors of companies whose stock is traded publicly to document and certify the system of internal controls
Sarbanes-Oxley Act (SOX)
Report explaining differences between the checking account balance and the bank statement balance
Bank Reconciliation
Referred to as the Income Statement method, it is based on the idea that a given percent of a company's credit sales for the period are uncollectible.
Percentage of Sales Method
What do you do to the note if it is not paid on time?
What is it called when you record a note that has matured but not been paid?
Dishonor the note