An insurance policy purchased by a company to protect against losses from theft by employees.
Bond
Cheques that the bank has paid and deducted from the customer's account during the month.
Cancelled cheques
Includes currency, coins, and amounts on deposit in bank chequing or savings accounts.
Cash
An income statement account used to record cash shortages and cash overages arising from omitted petty cash receipts and from errors in making change.
Cash Over and Short account
Lists the items such as currency, coins and cheques deposited along with each of their dollar amounts.
Deposit slip
The use of electronic communication to transfer cash from one party to another.
Electronic funds transfer
An itemized statement of goods prepared by the vendor that lists the customer's name, the items sold, the sales prices, and the terms of sale.
Invoice
Fundamental standards of internal control that apply to all companies requiring management to establish responsibility, maintain adequate records, insure assets and bond key employees, separate recordkeeping from custody of assets, divide responsibility for related transactions, apply technological controls, and perform regular and independent reviews.
Principles of internal control
Those assets which are most liquid, specifically, cash, short-term investments and receivables.
Quick Assets
An internal control standard requiring the division of responsibility for related transactions between two or more individuals or departments.
Segregation of Duties
Includes the signatures of each person authorized to sign cheques from the account.
Signature card
The buyer or purchaser of goods or services.
Vendee
The seller of goods or services, usually a manufacturer or wholesaler.
Vendor
An internal business paper (or folder) used to accumulate other papers and information needed to control cash disbursements and to ensure that the transaction is properly recorded.
Voucher
Acid-test ratio:
A ratio used to assess a company's ability to cover its current debts with existing assets calculated as quick assets (cash, short term investments, and receivables) divided by current liabilities; also called quick ratio.
Bank reconciliation:
An analysis that explains the difference between the balance of a chequing account shown in the depositor's records and the balance reported on the bank statement.
Bond:
An insurance policy purchased by a company to protect against houses from theft by that employee. (Chapter 9) A written promise to pay an amount identified as the par value of the bond along with interest at a stated annual amount; usually issued in denominations of $1,000.
Cancelled cheques:
Cheques that the bank has paid and deducted from the customer's account during the month.
Cash:
Includes currency, coins, and amounts on deposit in bank chequing or savings accounts.
Cash Over and Short account:
An income statement account used to record cash shortages and cash overages arising from omitted petty cash receipts and from errors in making change.
Cheque:
A document signed by the depositor instructing the bank to pay a specified amount of money to a designated recipient.
Collusion:
An act where two or more people agree to commit a fraud.
Deposit slip:
Lists the items such as currency, coins, and cheques deposited along with each of their dollar amounts.
Electronic funds transfer:
The use of electronic communication to transfer cash from one party to another.
Internal control system:
All the policies and procedures managers use to protect assets, ensure reliable accounting, promote efficient operations, and urge adherence to company policies.
Invoice:
An itemized statement of goods prepared by the vendor that lists the customer's name, the items sold, the sales prices, and the terms of sale.
Invoice approval form:
A document containing a checklist of steps necessary for approving an invoice for recording and payment; also called cheque authorization form.
Liquid asset:
An asset such as cash that is easily converted into other types of assets or used to buy services or to pay liabilities.
Liquidity:
A characteristic of an asset that refers to how easily the asset can be converted into cash or another type of asset or used in paying for services or obligations. (Chapter 9) Refers to the availability of resources to meet short-term cash requirements. (Chapter 20)
Principles of internal control:
Fundamental principles of internal control that apply to all companies requiring management to establish responsibility, maintain adequate records, insure assets and bond key employees, separate recordkeeping from custody of assets, divide responsibility for related transactions, apply technological controls, and perform regular and inde-pendent reviews.
Purchase order:
A business paper used by the purchasing department to place an order with the seller (vendor); authorizes the vendor to ship the ordered merchandise at the stated price and terms.
Purchase requisition:
A business paper listing the merchandise needed by a department and requests that it be purchased.
Quick assets:
Those current assets that are most liquid, specifically, cash, short-term investments, and receivables.
Quick ratio:
See acid-test ratio.
Receiving report:
A form used within a company to notify the appropriate persons that ordered goods are received and to describe the quantities and condition of the goods.
Separation of duties:
An internal control principle requiring the division of responsibility for related transactions between two or more individuals or departments.
Signature card:
Includes the signatures of each person authorized to sign cheques from the account.
Vendee:
The buyer or purchaser of goods or services.
Vendor:
The seller of goods or services, usually a manufacturer or wholesaler.
Voucher:
An internal business paper (or "folder") used to accumulate other papers and information needed to control cash disbursements and to ensure that the transaction is properly recorded.
Voucher system:
A set of procedures and approvals designed to control cash disbursements and acceptance of obligations.
