Accounting concepts

Accounting
Concepts chapter 5
* Administrative controls: Features of the internal control system that emphasize adherence to management’s policies and operating efficiency.
* Allowance for Uncollectible Accounts for Allowance for bad Debts: the valuation allowance that results in accounts receivable being reduced by the amount not expected to be collected.
* Bad debts expense (oruncollectible accounts expense): An estimated expense, recognized in the fiscal period of the sale, representing accounts receivable that are not expected to be collected.
* Bank reconciliation: The process of bringing into agreement the balance in the Cash account in the entity’s ledger and the balance reported by the bank on the bank statement.
* Bank service charge: The fee charged by abank for maintaining the entity’s cheking account.
* Carrying value: The balance of the ledger account (including related contra accounts, if any) of an asset, liability, or owners’ equity account. Sometimes referred to as book value.
* Cash: A company’s most liquid asset; includes money in change funds, petty cash, undeposited receipts such as currency, checks, bank drafts, and moneyorders, and funds immediately available in bank accounts.
* Cash discount: A discount offered for prompt payment.
* Cash equivalents: Short-term, highly liquid investments that can be readily converted into cash with a minimal risk of price change due to interest rate movements; examples include U.S. treasury securities, bank CD’s, money market funds and commercial paper.
* Collateral:Assets of a borrower that can be used to satisfy the obligation if payment is not made when due.
* Collect on delivery (COD): A requirement that an item be paid for when it is delivered. Sometimes COD is defined as ‘cash’ on delivery.
* Commercial paper: A short-term security usually issued by a large, creditworthy corporation.
* Contra asset: An account that normally has a credit balancethat is subtracted from a related asset on the balance sheet.
* Cost/flow assumption: An assumption made for accounting purposes that identifies how cost flow from the Inventory account to the Cost of Goods Sold account. Alternatives include specific identification; weighted average; first-in, first-out; and last-in, last-out.
* Cost of goods sold model: The way to calculate cost of goodssold when the periodic inventory system is used. The model is

Beginning inventory
+Purchase
Cost of goods available for sale
-Ending of inventory
=Cost of goods sold

* Credit terms: A seller’s policy with respect to when payment of aninvoice is due and what cash discount (if any) is allowed.
* Deferred charge: Expenditure made in one fiscal period that will be recognized as an expense in a future fiscal period. Another term for a prepaid expense.
* Deferred tax asset: An asset that arises because of temporary differences between when an item is recognized for book purposes.
* Deferred tax liability: A liability thatarises because of temporary differences between when an item is recognized for a book and tax purposes.
* Deposit in transit: A bank deposit that has been recorded in the entity’s cash account but that does not appear on the bank statement because the bank received the deposit after the date of the statement.
* Financial controls: Features of the internal control systems that emphasizeaccuracy of bookkeeping and financial statements and protection of assets.
* Finished goods inventory: The term used primarily by manufacturing firms to describe inventory ready for sale to customers.
* First-in, first-out (FIFO): The inventory cost-flow assumption that the first costs in to inventory are the first costs out to cost of goods sold.
* Imprest account: An asset account that...