14. The aging of accounts receivable method is based upon the principle that the longer an account is overdue, the higher the risk o nonpayment True False 13. Internal control systems must be True False Carefually read each question and then circle the letter of the correct answer Multiple Choice I. Intermal controls are concerned with A. only manual systems of accounting B. the extent of government regulations. C protecting against theft of assets and enhancing the reliability of accounting information D. preparing income tax returns. 2. The internal control principle related to separating employees' duties so that the work of one person can be used to check the work of another person is called: A. duplication of responsibility B. mandatory vacations C. segregation of duties D. rotation of duties 3. Whic h of the following is not stated as a primary objective of a company's internal control policies and procedures? A. The proper recording and authorization of transactions. B. The maintenance of adequate records. C. The prevention or detection of unauthorized activities involving a company's records. D. The provision of current information for outside investors and analysts. 4 The main purposes of internal controls do not include: A. prevention of error, theft, and fraud. B. promotion of operational efficiency C. ensuring compliance with laws and regulations. D. providing more favorable financial information. 5. Uncollectible accounts expense: A. Should not occur if the credit department properly investigates prospective customers who wish to purchase merchandise B. Is the amount of cash a business must pay each time a credit customer fails to pay his or her account. C. Is the amount a business must pay to a collection agency to recover amounts on overdue accounts receivable. D. Represents the loss in value of accounts receivable that eventually turn out to be uncollectible. 6. The Allowance for Doubtful Accounts represents: A. Cash set aside to make up for bad debt losses. B. The amount of uncollectible accounts C. The difference between total credit sales and collections on credit sales. D. Is an estimate of the amount of accounts receivable that may be uncollectable. 7. The aging of the accounts receivable approach to estimating uncollectible accounts does not: A. Take into consideration the existing balance in the Allowance for Doubtful Accounts. B. U tilize a percentage of probable uncollectible accounts for each age group of accounts receivable. C. Stress the relationship between uncollectible accounts expense and net sales. Tend to give a reliable estimate of uncollectible accounts because of the consideration given to the collectability of s accounts receivable