116.Effective internal control over accounts receivable ensures:
A. That credit is only extended to customers that meet the company's credit standards.
B. That an approved factor is used when the company sells its accounts receivable.
C. There is an accurate accounting for cash receipts, cash disbursements, and cash balances.
D. The availability of adequate cash for conducting business operations.
117.Effective internal control over accounts receivable ensures all of the following
except:
A. All shipments of goods during the period are recorded.
B. The sale transaction is recorded for the correct dollar amount.
C. That cash collections from customers are promptly deposited.
D. The availability of adequate cash for conducting business operations.
118.Effective internal control includes all the following steps
except:
A. The Customer Order department prepares a sales order upon receipt of an order.
B. The Billing department compares what was shipped with what was ordered and prepares and mails a sales invoice.
C. The Accounting department receives the checks and the mailroom listing of checks received and prepares the daily bank deposit.
D. The Accounting department reconciles the bank statement with accounting records.
119.The _______________ department compares what was shipped with what was ordered and prepares and mails an invoice.
A. Customer Order
B. Billing
C. Accounting
D. Credit
120.The _______________ department ensures that the goods shipped match those ordered by the customer.
A. Customer Order
B. Billing
C. Accounting
D. Shipping
121.The Allowance for Doubtful Accounts will appear on the:
A. Income statement.
B. Balance sheet.
C. Cash flow statement.
D. Owners' equity statement.
122.Under the allowance method, when a receivable that had been previously written off is collected:
A. Net income is increased.
B. Net assets are increased.
C. Net income and net assets are not affected.
D. Net assets and net income are both increased.
123.When the account Allowance for Doubtful Accounts is used, writing off of an uncollectible accounts receivable will:
A. Reduce income.
B. Reduce an expense.
C. Not change income or total assets.
D. Increase total assets.
124.Accounts receivable are classified as current assets:
A. Only if convertible into cash within 60 days or sooner.
B. Only if the allowance method is used to estimate the uncollectible accounts.
C. Only if convertible into cash within one year.
D. Whenever the accounts receivable arise from "normal" sales of merchandise to customers, regardless of the credit terms.
125.Uncollectible accounts expense:
A. Should not occur if the credit department properly investigates prospective customers who wish to purchase merchandise on credit.
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 are estimated to be uncollectible.