Acc 1810 Chapter 8

chapter 8

Artificial intelligence (AI)

Computer systems that can perform tasks typically requiring human intelligence, such as problem-solving, learning, and pattern recognition, by processing large amounts of data and using algorithms.

Bank reconciliation

Report that explains the difference between the book (company) balance of cash and the cash balance reported on the bank statement, for purposes of computing the adjusted cash balance.

Bank statement

Bank report on the depositor’s beginning and ending cash balances, and a listing of its changes, for a period.

Blockchain

Technology used to create a secure ledger of transactions.

Canceled checks

Checks that the bank has paid and deducted from the depositor’s account.

Cash

Includes currency, coins, and amounts on deposit in bank checking or savings accounts.

Cash equivalents

Short-term investment assets that are readily convertible to a known cash amount or sufficiently close to their maturity date (usually within 90 days) so that market value is not sensitive to interest rate changes.

Cash Over and Short

Income statement account used to record cash overages and cash shortages arising from errors in cash receipts or payments.

Check

Document signed by a depositor instructing the bank to pay a specified amount to a designated recipient.

Check register

Another name for a cash disbursements journal when the journal has a column for check numbers.

Committee of Sponsoring Organizations (COSO)

Committee of Sponsoring Organizations of the Treadway Commission (or COSO) is a joint initiative of five private sector organizations and is dedicated to providing thought leadership through the development of frameworks and guidance on enterprise risk management, internal control, and fraud deterrence.

Data analytics

A process of analyzing data to identify meaningful relations and trends; in accounting, data analytics helps individuals make informed business decisions.

Days’ sales uncollected

Measure of the liquidity of receivables:

Accounts receivable / net sales X 365

Deposit ticket

Lists items such as currency, coins, and checks deposited and their corresponding dollar amounts.

Deposits in transit

Deposits recorded by the company but not yet recorded by its bank.

Electronic funds transfer (EFT)

Use of electronic communication to transfer cash from one party to another.

Enterprise resource planning (ERP) software

Programs that manage a company’s vital operations, which range from order taking to production to accounting.

Firewall

A security system that monitors and controls incoming and outgoing network traffic to protect devices and data from unauthorized access or malicious activity.

Fraud triangle

Highlights three factors that push a person to commit fraud: opportunity, pressure, and rationalization.

Internal controls or internal control system

All policies and procedures used to protect assets, ensure reliable accounting, promote efficient operations, and urge adherence to company policies.

Invoice

Itemized record of goods prepared by the vendor that lists the customer’s name, items sold, sales prices, and terms of sale.

Invoice approval

Document containing a checklist of steps necessary for approving the recording and payment of an invoice; also called check authorization.

Liquid assets

Resources such as cash that are easily converted into other assets or used to pay for goods, services, or liabilities.

Liquidity

Availability of resources to meet short-term cash requirements.

Outstanding checks

Checks written and recorded by the depositor but not yet paid by the bank at the bank statement date.

Petty cash

Small amount of cash in a fund to pay minor expenses; accounted for using an imprest system.

Principles of internal control

Principles prescribing management to establish responsibility, maintain records, insure assets, separate recordkeeping from custody of assets, divide responsibility for related transactions, apply technological controls, and perform reviews.

Purchase order

Document used by the purchasing department to place an order with a seller (vendor).

Purchase requisition

Document listing merchandise needed by a department and requesting it be purchased.

Receiving report

Form used to report that ordered goods were received and to describe their quantity and condition.

Robotic process automation (RPA)

The use of software bots to automate repetitive and rule-based tasks, improving efficiency and reducing errors in accounting processes.

Sarbanes-Oxley Act (SOX)

Legislation that created the Public Company Accounting Oversight Board, regulates analyst conflicts, imposes corporate governance requirements, enhances accounting and control disclosures, impacts insider transactions and executive loans, establishes new types of criminal conduct, and expands penalties for violations of federal securities laws.

Signature card

Includes the signature of each person authorized to sign checks on the bank account.

Two-factor authentication (2FA)

A security measure that requires two separate forms of identification before one can gain access to an account, which usually combines something users know (like a password) with something they have (like a mobile device).

Vendee

Buyer of goods or services.

Vendor

Seller of goods or services.

Virtual private network (VPN)

A secure, encrypted connection between a user’s device and a private network, enabling users to transmit data securely over networks.

Voucher

Internal file used to store documents and information to control cash disbursements and to ensure that a transaction is properly authorized and recorded.

Voucher register

Journal (referred to as book of original entry) in which all vouchers are recorded after they have been approved.

Voucher system

Procedures and approvals designed to control cash disbursements and acceptance of obligations.