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ACC 207 Final Review - ACC 207: FINAL REVIEW CHAPTER 6...

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ACC 207: FINAL REVIEWCHAPTER 6Different types of business organization like service company, manufacturing company andmerchandising company. One question on final and you have to determine which type it relatesto.Service Company:Sells services rather than physical goodsMerchandising Companies:Sells goods that have been obtained from a supplierManufacturing Company:Sells goods that is has made itselfEverything about Internal control principle, and what are we trying to safeguard.Internal Controls: Methods to protect against theft of assets, enhance the reliability ofaccounting information, promote efficient and effective operations, and ensure compliance withapplicable laws and regulations1) Establish Responsibility: Assign one task to only one employee2)Segregate Duties: Don’t make one employee responsible for everything3)Restrict Access: Don’t provide access to assets or info unless needed4)Document Procedures: Prepare documents to show activities have occurred5)Independently Verify: Check others workBank reconciliation, why do we do it? What items are on the statement?Provides independent verification of all cash transactions that the bank has processedfor the companyIncludes Checks Cleared, Deposits Made, Other TransactionsFor bank reconciliation, you need to know journal entries*you know you only do adjusting to books side*If a company sells products and they have returns and allowances, and they’re using perpetualInventory system how would they record thatPerpetual Inventory System: updates inventory records every time an item isbought, sold or returned.Two Components: Selling Price and CostEx.Sells a good for $400, but only cost $350 to make. If a customer returns it thisis how you will record the entrydr.Cash(+A) …………………………400cr.Sales Revenue (+R, +SE) ……………….400dr.Costs of Goods Sold (+E, -SE) …….350cr. Inventory (-A) …………………………..350
FOB shipping point and destinationFOB Shipping Point: The sale is recorded when the goods leave the seller’sshipping departmentFOB destination: The sale is recorded when the goods reach their destination(the customer)ANY ADJUSTMENTS FOR BOOSK SIDE YOU NEED TO LEARN ADJUSTING ENTRIES.Not sufficient checks, collection of notes receivable, service charge, electronic funds transferNSF check: Not honored by the bank of the person or company writing the checkbecause that account did not have a sufficient balanceWhen check comes back, the bank will decrease the checking account ofthe company that had deposited the checkService Charge:Fees deducted from the bank statement for the bank’s processing of thechecking account activityReduce the cash balance in company’s accounting record for how muchthe service charge isNotes Receivable: Bank collects notes receivable payments on behalf of the companyElectronic Funds Transfer: When a customer electronically transfer funds from its bankaccount to the company’s bank accountDebit cash and credit each customer’s account receivable

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Term
Winter
Professor
FOLEY
Tags
Financial Accounting, Balance Sheet, Generally Accepted Accounting Principles, dr cash

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