Why Is a Separate Payroll Account Used to Clear Payroll

question 31

Multiple Choice

Why is a separate payroll account used to clear payroll checks?

• A) for internal control purposes, to help limit any exposure to loss by the company
• B) to make bank reconciliation easier
• C) Banks don't like to commingle payroll and expense checks.
• D) All of the above are correct.

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Definitions:

Production Costs

Expenses incurred by a business in the process of creating a good or service, including raw materials, labor, and overhead.

Elasticity

The measure of how much the quantity demanded or supplied of a product changes in response to a change in its price.

Resource Demand

The desire and ability of businesses or individuals to acquire resources or inputs required to produce goods and services.

Resource Price

Resource price is the cost associated with acquiring the inputs needed for production, including labor, raw materials, and capital.