Preparation of a Proof of Cash Would Not Be Useful

question 98

Multiple Choice

Preparation of a proof of cash would not be useful in discovering differences between the actual and reported cash balances if the differences were due to:

• A)deposits in transit.
• B)collections on the company's behalf by the bank which are deposited directly to the company's account.
• C)cash receipts that were not recorded in the relevant accounting records.
• D)service charges.

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Definitions:

Nominal Charge

A minimal or symbolic fee often charged to meet legal requirements rather than to cover the cost of services.

Consumption

The use of goods and services by households.

Restricted Fund Method

An accounting technique for managing funds that have specific purposes or restrictions placed upon their use by donors.

Operating Fund

A fund used to cover the day-to-day operational expenses of an organization.