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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Which one of the following statements is true?

  1. Sound internal control practice dictates that cash disbursements should be made by check, unless the disbursement is very small.
  2. Petty cash can be substituted for a checking account to expedite the payment of all disbursements.
  3. Good cash management practices dictate that a company should maintain as large a balance as possible in its cash account.
  4. The person handling the cash should also prepare the bank reconciliation.

To determine

To choose: Which statement is better for company.

Explanation

Explanation for correct answers:

Option (a) This statement is correct because all payment should be paid only by check unless the payment amount is less. because company need cash on daily basic for small transaction.

Explanation for incorrect answers:

Option (b) Normally business to be paid the cash payment for small expense because these expense amounts are small so cash manager have sufficient cash for these expenses...

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