Which of the Following Statements Incorrectly Describes an Imprest System

question 157

Multiple Choice

Which of the following statements incorrectly describes an imprest system?

• A)An imprest system is an internal control procedure relating to cash payments.
• B)An imprest system helps eliminate the risk that the bank might overpay or underpay an employee.
• C)The use of an imprest system eliminates the need for bank reconciliations.
• D)If the transfers from the payroll account to the employees' checking accounts occur without error,the imprest payroll bank account will equal zero after all employees have been paid.

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Definitions:

Par Value

The face value of a bond or stock as stated by the issuing company, unrelated to its market value.

Common Stock

A form of corporate equity ownership, a type of security representing ownership in a corporation and a claim on part of the corporation's profits or losses.

Paid-in Capital

Funds received from investors during the issuance of stock, exceeding the par or stated value of the shares, also known as "contributed capital."

Legal Capital

The portion of a company's equity that cannot legally be distributed to shareholders, often equivalent to the par value of the shares.