It Is a Good Internal Control Practice to Make Most

question 9

True/False

It is a good internal control practice to make most expenditures using cash, rather than checks.

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Definitions:

Financing Activity

Financial transactions and events that affect the equity and debt structure of a company, including borrowing, repaying debt, and issuing or buying back shares.

Operating Activity

Transactions and events related to the core business operations of a company, including revenue generation and expenses related to producing goods and services.

Gain

A financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Indirect Method

A method used in cash flow statements to adjust net income for the changes in non-cash accounts to calculate the cash from operating activities.