Solution Manual for Accounting What The Numbers Mean,
13th Edition By David Marshall
administrative controls - ANSWER:Features of the internal control system that
emphasize adherence to management's policies and operating efficiency.
Allowance for Uncollectible Accounts (or Allowance for Bad Debts) - ANSWER:The
valuation allowance that results in accounts receivable being reduced by the amount
not expected to be collected.
bad debts expense (or uncollectible accounts expense) - ANSWER:An estimated
expense, recognized in the fiscal period of the sale, representing accounts receivable
that are not expected to be collected.
bank reconciliation - ANSWER: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 - ANSWER:The fee charged by a bank for maintaining the entity's
checking account.
carrying value - ANSWER: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 - ANSWER:A company's most liquid asset: includes money in change funds,
petty cash, undeposited receipts such as currency, checks, bank drafts, and money
orders, and funds immediately available in bank accounts.
cash discount - ANSWER:a discount offered for prompt payment.
cash equivalents - ANSWER:Short-term, highly liquid investment that can be readily
converted into cash with a minimal risk of price change due to interest rate
movements; examples include US Treasury securities, bank CD's, money market
funds, and commercial paper.
collateral - ANSWER:Assets of a borrower that can be used to satisfy the obligation if
payment is not made when due.
Collect on delivery (COD) - ANSWER:A requirement that an item be paid for when it
is delivered. Sometimes COD is defined as "Cash on Delivery".
Commercial Paper - ANSWER:A short-term security usually issued by a large,
creditworthy corporation.
, contra asset - ANSWER:An account that normally has a credit balance that is
subtracted from a related asset on the balance sheet.
cost-flow assumption - ANSWER:An assumption made for accounting purposes that
identifies how costs 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, first-out.
cost of good sold model - ANSWER:The way to calculate cost of goods sold when the
periodic inventory system is used. The model is:
Beginning inventory
+Purchases
= Cost of goods available for sale
-ending inventory
= cost of goods sold
credit terms - ANSWER:a seller's policy with respect to when payment of an invoice
is due and what cash discount (if any) is allowed.
deferred charge - ANSWER:An 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 - ANSWER:An asset that arises because of temporary differences
between when an an item is recognized for book and tax purposes.
Deferred tax liability - ANSWER:A liability that arises because of temporary
differences between when an item is recognized for book and tax purposes.
deposit in transit - ANSWER:A bank deposit that has been recorded int he 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 - ANSWER:Features of the the internal control system that
emphasize accuracy of bookkeeping and financial statement and protection of
assets.
Finished goods inventory - ANSWER:The term used primarily by manufacturing firms
to describe inventory ready for sale to customers.
first-in, first-out (FIFO) - ANSWER:The inventory cost-flow assumption that the first
costs in to inventory are the first costs out to cost of goods sold.
imprest account - ANSWER:An asset account that has a constant balance in the
ledger; cash on hand and vouchers (as receipts for payments) add up to the account
balance. Used especial for petty cash funds.
13th Edition By David Marshall
administrative controls - ANSWER:Features of the internal control system that
emphasize adherence to management's policies and operating efficiency.
Allowance for Uncollectible Accounts (or Allowance for Bad Debts) - ANSWER:The
valuation allowance that results in accounts receivable being reduced by the amount
not expected to be collected.
bad debts expense (or uncollectible accounts expense) - ANSWER:An estimated
expense, recognized in the fiscal period of the sale, representing accounts receivable
that are not expected to be collected.
bank reconciliation - ANSWER: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 - ANSWER:The fee charged by a bank for maintaining the entity's
checking account.
carrying value - ANSWER: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 - ANSWER:A company's most liquid asset: includes money in change funds,
petty cash, undeposited receipts such as currency, checks, bank drafts, and money
orders, and funds immediately available in bank accounts.
cash discount - ANSWER:a discount offered for prompt payment.
cash equivalents - ANSWER:Short-term, highly liquid investment that can be readily
converted into cash with a minimal risk of price change due to interest rate
movements; examples include US Treasury securities, bank CD's, money market
funds, and commercial paper.
collateral - ANSWER:Assets of a borrower that can be used to satisfy the obligation if
payment is not made when due.
Collect on delivery (COD) - ANSWER:A requirement that an item be paid for when it
is delivered. Sometimes COD is defined as "Cash on Delivery".
Commercial Paper - ANSWER:A short-term security usually issued by a large,
creditworthy corporation.
, contra asset - ANSWER:An account that normally has a credit balance that is
subtracted from a related asset on the balance sheet.
cost-flow assumption - ANSWER:An assumption made for accounting purposes that
identifies how costs 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, first-out.
cost of good sold model - ANSWER:The way to calculate cost of goods sold when the
periodic inventory system is used. The model is:
Beginning inventory
+Purchases
= Cost of goods available for sale
-ending inventory
= cost of goods sold
credit terms - ANSWER:a seller's policy with respect to when payment of an invoice
is due and what cash discount (if any) is allowed.
deferred charge - ANSWER:An 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 - ANSWER:An asset that arises because of temporary differences
between when an an item is recognized for book and tax purposes.
Deferred tax liability - ANSWER:A liability that arises because of temporary
differences between when an item is recognized for book and tax purposes.
deposit in transit - ANSWER:A bank deposit that has been recorded int he 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 - ANSWER:Features of the the internal control system that
emphasize accuracy of bookkeeping and financial statement and protection of
assets.
Finished goods inventory - ANSWER:The term used primarily by manufacturing firms
to describe inventory ready for sale to customers.
first-in, first-out (FIFO) - ANSWER:The inventory cost-flow assumption that the first
costs in to inventory are the first costs out to cost of goods sold.
imprest account - ANSWER:An asset account that has a constant balance in the
ledger; cash on hand and vouchers (as receipts for payments) add up to the account
balance. Used especial for petty cash funds.
