Which One of the Following Statements Is Correct Concerning a Cash

question 70

Multiple Choice

Which one of the following statements is correct concerning a cash management system that employs both lockboxes and a concentration bank account?

• A)All customer payments must be submitted to a lockbox.
• B)The party which collects the checks from the lockbox is responsible for recording the payment on the customer's account.
• C)Payments received in a lockbox are transferred immediately to the concentration account.
• D)The firm's cash manager determines how the funds in the concentration account are disbursed.
• E)The concentration account must be zeroed out on a daily basis.

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Definitions:

Salaries Payable

An account that records owed but unpaid wages to employees, regarded as a current liability on the balance sheet.

Prepaid Salaries

Expenses paid in advance for salaries, which are recorded as an asset on the balance sheet until they are actually incurred.

Salaries

Regular payments made to employees for performing their jobs, typically expressed as an annual amount but paid in smaller increments such as monthly or bi-weekly.

Expense Incurred

A cost that has been realized during the performance of business activities, pending payment or already paid.