From an internal control standpoint, the asset most susceptible to improper diversion and use is: a. prepaid insurance. b. cash. c. buildings. d. land. 2. Each of the following is a feature of internal control except a. limited access to assets. b. independent internal verifications. c. authorization of transactions. d. generic design of documents. 3. Under the allowance method, Bad Debt Expense is recorded a. when an individual account is written off. b. when the loss amount is known. c. for an amount that the company estimates it will not collect. d. several times during the accounting period. 4. Three accounting issues associated with accounts receivable are a. depreciating, returns, and valuing. b. depreciating, valuing, and collecting. c. accrual, bad debts, and accelerating collections. d. recognizing, valuing, and accelerating collections. 5. Liabilities are classified on the balance sheet as current or a. deferred. b. unearned. c. long-term. d. accrued. 6. A current liability is a debt that can reasonably be expected to be paid a. within one year, or the operating cycle, whichever is longer. b. between 6 months and 18 months. c. out of currently recognized revenues. d. out of cash currently on hand. 7. If common stock is issued for an amount greater than par value, the excess should be credited to a. Cash. b. Retained Earnings. c. Paid-in Capital in Excess of Par Value. d. Legal Capital. 8. Par value a. represents what a share of stock is worth. b. represents the original selling price for a share of stock. c. is established for a share of stock after it is issued. d. is the value assigned per share in the corporate charter. 9. Which one of the following is not a tool in financial statement analysis? a. Horizontal analysis b. Circular analysis c. Vertical analysis d. Ratio analysis 10. Which of the following is not an irregular item on the income statement? a. Discontinued operations b. Extraordinary items c. Other revenues and expenses d. Loss on disposal of a significant component of a business Financial & Managerial Accounting: The Basis for Business Decisions 11. Which of the following is not an example of an intangible asset: a. Goodwill b. Patents c. Trademarks d. Natural Resources 12. Which of the following is not an element of the master budget? a. The capital expenditures budget. b. The production schedule. c. The operating expense budget. d. All of the above are elements of the master budget. Financial Accounting Theory and Analysis 13. Which of the following is not a component of working capital? a. Fixed assets b. Inventories c. Accounts receivable d. Accrued wages 14. Leasing has become a popular method of acquiring property because it has which of the following advantages: a. It offers 100 percent financing. b. It offers protection against obsolescence. c. If the lease qualifies as an operating lease, it does not add debt to the balance sheet. d. All of the above