A Primary Purpose of the Proof of Cash Is To

question 56

Multiple Choice

A primary purpose of the proof of cash is to:

• A)prevent fraud.
• B)reconcile actual cash receipts and disbursements to budgeted receipts and disbursements.
• C)investigate variances from expected cash balances.
• D)ensure that all cash receipts recorded in the cash receipts journal were deposited in the bank account.

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Definitions:

Treasury Bills

Short-term government securities with maturities ranging from a few days to 52 weeks, often considered risk-free investments.

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically used for the financing of payroll, accounts payable, and inventories.

DSO

Days Sales Outstanding, a financial metric that measures the average number of days that a company takes to collect payment after making a sale.

Seasonal Sales

Sales that fluctuate during certain times of the year due to seasonal factors, such as holidays or weather changes.