QUESTION 6 Internal control systems include a use preprinted, sequentially numbered checks and invoices b.separation of duties and responsibilities c. periodic independent verification d. all are correct QUESTION 7 An estimate of the amount a company expects an asset will be worth at the end of its useful life is called a. residual value b.sales value c. book value d.market value QUESTION 8 What is the term used to write off the cost of natural resources a. depreciation b.units of production c. depletion d. amortization QUESTION 9 The balance in the A/D account represents a. the amount added to the cost of the asset to arrive at fair market value b. the amount deducted from the cost of the asset to arrive at fair market value c. depreciation expense for the current year d.depreciation expense taken since purchase of the asset QUESTION 10 A/R minus the allowance for bad debts is called a. net realizable value b. A/R c. bad debt expense d. allowance for bad debts QUESTION 11 From an internal control standpoint, which asset is the most susceptible to improper diversion and use is a.AR c. prepaids d.cash QUESTION 12 The conservative principle requires companies to use the a. same cost flow method from year to year b. same cost flow method on all inventory items c. least likely to understate assets and income d. lower of cost or market method QUESTION 13 Which method can only be used for tax reporting (cannot be used for financial reporting)? a. units of production b.straight-line C. MACRS d.double declining balance QUESTION 14 FIFO inventory assumes the cost of the earliest purchases are a. sold first b.last in ending inventory c. first in ending inventory d.sold last QUESTION 15 Cost minus residual value equals a. salvage value b. market value c. accumulated depreciation d.depreciable cost QUESTION 16 Long-term assets are a. can only be tangible in nature b.inventory c. purchased with the intent of resale d. assets acquired to be used in the business for more than one year QUESTION 17 Net book value of an asset equals a. original cost of the asset minus accumulated depreciation b.original cost of the asset minus depreciation expense d.original cost of the asset minus cash paid for the asset QUESTION 18 Outstanding checks have been a. subtracted from the checkbook balance but not presented to the bank for payment b.returned to the payee as NSF c. subtracted on the bank statement but not on the checkbook d. presented to the bank for payment but not subtracted from the checkbook QUESTION 19 Revenue expenditures a. include ordinary repair and maintenance b.are usually expensed as incurred c. do not extend the useful life of an asset d. all are revenue expenditures