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:

Fixed Cost

Costs that do not change with the level of output produced, such as rent or salaries.

Lawn-mowing

The process of cutting or trimming the grass in a yard or field to maintain a neat and uniform appearance.

Variable Costs

Expenses that change in proportion to the amount of goods or services produced, like labor and materials.

Profit-maximizing Output

The point of production where a company reaches its maximum profit, occurring when marginal cost matches marginal revenue.