Two common subsidiary ledgers are cash receipts and cash disbursements. Collusion occurs when a person embezzles money from a company and tries to hide the evidence. The Petty Cash account is a separate checking account used for small amounts. A contingent liability is an obligation to make a future payment if an uncertain future event occurs. The use of an allowance for bad debts is required under the materiality principle.
Plant assets are intangible assets used in the operations of a business.
Because depreciation is based on predictions of salvage value and useful life, depreciation is an aestimate. The full disclosure principle requries reporting of contingent liabilities that are reasonably possible. When a note lacks a stated interest rate it is called a noninterestbearing note. Define the business entity principle. List two examples of source documents.