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BUS ADM 201 UWM EXAM 2
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BUS ADM 201 UWM EXAM 2
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BUS ADM 201 UWM EXAM 2what is a perpetual inventory system? -
-checks accuracy
-determines amount lost due to waste, shoplifting
what is a periodic inventory system? -
-determines cogs and inventory at end of period
attributes of specific identification inventory system -
-identifies all costs associated with a specific unit of inventory
-works best for inventory specific to customer specifications
attributes of FIFO inventory system -
-first item you purchased will be the first unit you sell
-cost of most recent goods purchased are used to determine ending inventory
attributes of LIFO inventory system -
-last item you purchased will be the first unit you sell
-cost of oldest inventory purchase are used to determine inventory ending
attributes of average cost inventory system -
-allocated cost of goods available for sale on the basis of weighted-average cost incurred
inventory turnover ratio -
cogs/average inventory
days in inventory -
365/inventory turnover ratio
cash equivalents -
-short term, highly liquid investments that are readily convertible to cash
restricted cash -
-cash is not available for general use but rather is restricted for a special purpose
what are internal controls -
-methods and measures adopted to safeguard assets, enhance reliability of accounting
records, ensure compliance with regulations
what is a debit memo -
-decreases cash
-NSF, bank service charge
what is a credit memo -
-increases cash
-collection so notes made by bank, interest earned
what items do you reconcile on the bank statement -
+ deposits in transit
, - outstanding checks
+/- bank errors
what items do you reconcile on the books -
+ EFT collections and other deposits
- NSF checks
- service charges and other payments
+/- company errors
attributes of the internal control: establishment of responsibility -
-one person responsible
-limiting access to authorized personnel
attributes of the internal control: segregation of duties -
-different individuals responsible for related activities
-cashier versus accountant
attributes of the internal control: documentation procedures -
-verifiability
-all docs accounted for
-prenumbered checks/check authorization
attributes of the internal control: physical controls -
-limited access to cash
attributes of the internal control: independent internal verification -
-records periodically verified by an employee who is independent
attributes of the internal control: human resource controls -
-background checks
-rotate employees duties
what is the revenue recognition principle -
companies recognize revenue when service is performed
how do you journalize a "write off" -
debit: allowance for doubtful accounts
credit: accounts receivables
how do accounts receivables/allowance for doubtful accounts affect the balance sheet -
accounts receivables
less: allowance for doubtful accounts
=net accounts receivables
how do accounts receivables/allowance for doubtful accounts affect the income statement -
revenue
less: COGS
=gross profit
less: bad debt expense
=net income
attributes of the percentage of sales (income statement approach) method to record receivables -
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