1. Internal control over accounts receivable is achieved when the employee who handles the accounting for receivables:
a. also is involved with the operating aspects of approving credit.
b. also is involved with the operating aspects of colleting receivables.
c. is not involved with the operating aspects of approving credit.
d. also is involved with authorizing adjustments to receivables.
2. A modification to an asset to make it more efficient, usually by replacing one of its components with an improved or superior component is called a(n):
a. extraordinary repair.
b. revenue expenditure.
c. betterment.
d. ordinary repair
3. The indirect method of preparing the statement of cash flows:
a. is preferred by FASB.
b. is more commonly used in practice.
c. produces a different amount for cash flows from operating activities than the directmethod.
d. produces a different amount for cash flows from investing activities than the direct method.
4. Which of the following items would not constitute a significant income component and require disclosure on the income statement:
a. extraordinary items.
b. prior period adjustments.
c. changes in accounting estimates.
d. changes in accounting principles.
5. A debit entry increases the balance of:
a. assets and liabilities.
b. assets and stockholders’ equity.
c. liabilities and expenses.
d. assets and expense