11. Which of the following is not a generally recognized internal control procedure?

A. Establishment of clear lines of authority.

B. Customer service comment cards.

C. Requiring regular vacations for certain employees.

D. Having employees covered by a fidelity bond.

12. Which of the following statements accurately describes a fidelity bond?

A. Insurance that the company buys to protect itself from loss due to employee dishonesty.

B. Proper procedures for processing transactions.

C. Procedures to provide reasonable assurance that the objectives of a company are accomplished.

D. Guidelines or policies that limit the actions of different levels of management.

13. Which of the following is not one of the purposes of an internal control system?

A. Safeguarding the company's assets.

B. Ensuring that the company is using the most effective marketing plan.

C. The assessment of the degree of compliance with company policies and public laws.

D. The evaluation of performance.

14. The amount of accounts receivable that is actually expected to be collected is known as:

A. Net realizable value.

B. Uncollectible accounts expense.

C. The present value of accounts receivable.

D. Allowance for doubtful accounts.

15. A company that uses the allowance method to account for uncollectible accounts

A. Reports the net realizable value of its accounts receivable on the balance sheet.

B. Does not record uncollectible accounts until the amount becomes significant.

C. Records Uncollectible Accounts Expense when a receivable is written off.

D. None of these.

16. Hailey Medical Supply Co., which had no beginning balance in its Accounts Receivable and Allowance for Doubtful Accounts, earned $80,000 of revenue on account during 2013. During 2013, Hailey collected $64,000 of cash from its receivables accounts. The company estimates that it will be unable to collect 1% of revenue on account. The amount of net realizable value of receivables on the December 31, 2013 balance sheet would be:

A. $15,360.

B. $15,200.

C. $16,000.

D. $15,000.

17. Which one of the following is not an accurate description of the Allowance for Doubtful Accounts?

A. The account is an income statement account.

B. The account is a contra account.

C. The amount of the Allowance for Doubtful Accounts decreases the net realizable value of a company's receivables.

D. The account is increased by an estimate of uncollectible accounts expense.

18. The percent of receivables method to estimate uncollectible accounts expense is also known as:

A. the income statement approach.

B. the direct write-off approach.

C. the balance sheet approach.

D. the credit sales approach.

19. The primary reason for a business to allow customers to purchase goods or services on account is to:

A. decrease the marketability of the company's inventory.

B. increase cash flow from financing.

C. decrease cost of goods sold.

D. increase sales.

20. Which of the following would be classified as a tangible asset?

A. Copyright.

B. Goodwill.

C. Land improvement.

D. Trademark.