An Entity with a Large Volume of Customer Remittances by Mail

question 15

Multiple Choice

An entity with a large volume of customer remittances by mail could most likely reduce the risk of employee misappropriation of cash by using:

• A)employee fidelity bonds.
• B)independently prepared mailroom prelists.
• C)daily check summaries.
• D)a bank lockbox system.

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Definitions:

Minimum Cash Balance

The least amount of cash that a company aims to hold in its accounts to meet immediate operational needs.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, excluding direct material and direct labor costs.

Direct Materials

Raw materials that can be directly attributed to the manufacturing of a product.

Income Taxes

Taxes levied by governments on the income generated by businesses and individuals within their jurisdiction.