Risk Assessment

Control Environment

Control Activities

Information and Communication

Monitoring Activities

To reduce the amount of accounts receivables.

To show the credit sales price.

To encourage the customer to make their payment earlier.

To show the losses incurred due to uncollectible receivables.

To record the written-off uncollectible account receivables.

Safeguard assets

Employees comply with laws

Separation of duties

Provide reasonable assurance

Business information is accurate

Inventoy purchase

Sold inventory

Unsold inventory

Depreciation

Current liability

Cash (net) realizable value

Bad debt expense

Aging of accounts receivable

Percentage of receivable basis

Percentage of sales basis

cash and accrual

returns and allowances

First in first out and last in firs out

purchase and sale

perpetual and periodic

the trade name of the drawee bank

the name, surname or trade name of the owner of the check

the total number of the banks in which the owner of the check has check account

the number and amount of checks paid within the last ten years

the date of presentation for the last check paid

Recognition of Accounts Receivable

Cash (net) realizable value

Valuation of accounts receivable

Disposition of accounts receivable

Sales receivable

COGS 

Purchases

Net purchases

Purchase returns

Accounts payable

Trade discounts usually decrase for a customer when a company either wants to encourage prompt payment 

Trade discounts offer a cash discount to companies' customers if they agree to pay within a designated period.

Only the cost is recorded after a net of the trade discounts.

Trade discounts are not recorded and therefore they are not reflected in the books of accounting for both buyer and seller

Trade discounts increase the final sales price and are not affected by the date of payment

Assignment of responsibilities

Seperation of duties

Monitoring and audits

Information technology

Documentation

as an addition to sales

as an addition to inventory

as a deduction from sales

as an operating expense

as an operating revenue

I

I and II

II and III

I and III

I, II and III

Accounting equation best reflects the equity owners' residual claim on total assets after subtracting all liabilities.  Assets = Shareholders' Equity + Liabilities. 

An accounting equity is an individual accounting tool that shows the increases and decreases in a specific asset, item during a specified period.

An accounting equity are the basic storage units for accounting data and are used to accumulate amounts from similar financial transactions. so, an account is a summary device of accounting.

An Accounting equity is cash-equity. Cash equity  means business’s money and any medium of exchange including paper currency, coins, certificates of deposit, and checks.

An Accounting equity is that companies might sell their goods and services on account and receives a promise for future collection of cash.

Inventory in hand

Cost of goods sold

Unsold inventory

Partial inventory

Perpetual inventory

Costs of goods sold

Sales revenue

Expenses

Gross profit

Income before tax

Control environment

Risk assessment

Control activities

Information and communication

Monitoring activities

Income before tax

Gross profit

Net sates

Expenses

Operating income

Expense

Loss

Cost

Revenue

Asset

Perpetual inventory system has a widespread use, because it provides high level of control over inventories.

In this system, companies continuously update the inventory account whenever a transaction occurs.

The purchases of inventories are directly debited to inventory account, while the cost of inventories are credited when they are sold.

In perpetual inventory system, companies use “Purchase” account to record their purchases of inventories.

Perpetual
inventory system provides the companies opportunity to
compare the amounts of inventories in accounting records stolen or wasted goods are not detected, because and in warehouses.