Which One of the Following Components of the System of Internal

question 35

Multiple Choice

Which one of the following components of the system of internal controls sets the tone for the organization?

• A)control risk assessment
• B)control environment
• C)information and communication
• D)monitoring

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Definitions:

Allowance for Doubtful Accounts

An estimation of the amount of credit sales that are expected to turn into bad debts.

Bad Debts Expense

The cost associated with accounts receivable that a company is unable to collect, considered an expense on the income statement.

Note Receivable

A financial asset representing a promise to receive a specific amount of money in the future, often with interest.

Receipt

A written acknowledgment that something of value has been transferred from one party to another.