Which of the Following Procedures Would Weaken Control Over Cash

question 66

Multiple Choice

Which of the following procedures would weaken control over cash receipts that arrive through the mail?

• A)After the mail is opened,a list (in triplicate)of the money received is prepared with a record of the sender's name,the amount,and an explanation of why the money is sent.
• B)The bank reconciliation is prepared by a person who does not handle cash or record cash receipts.
• C)For safety,only one person should open the mail,and that person should immediately deposit the cash received in the bank.
• D)The cashier deposits the money in the bank and the recordkeeper records the amounts received in the accounting records.
• E)The employees handling the cash receipts are bonded.

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Definitions:

Market Price

The current market quote for the sale or purchase of an asset or service.

Debt-equity Ratio

A calculation showing how much a firm relies on borrowed funds, determined by dividing the sum of its obligations by the equity of its shareholders.

Pre-tax Cost

The cost of an investment or expense before any taxes are applied, often considered when evaluating investment options.

Cost of Equity

The presumed income given to a firm's equity investors to reimburse them for the risk undertaken with their investment.