Which of the Following Procedures Would Weaken Control Over Cash

question 192

Multiple Choice

Which of the following procedures would weaken control over cash receipts that arrive through the mail?

• A) The employees handling the cash receipts are bonded.
• B) For safety, only one person should open the mail, and that person should immediately deposit the cash received in the bank.
• C) The cashier deposits the money in the bank and the recordkeeper records the amounts received in the accounting records.
• D) After the mail is opened, a list (in triplicate) of the money received is prepared with a record of the sender's name, the amount, and an explanation of why the money is sent.
• E) The bank reconciliation is prepared by a person who does not handle cash or record cash receipts.

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Definitions:

Accounting Profits

Accounting profits refer to the net earnings of a company as calculated by subtracting total expenses from total revenues, using standard accounting principles.

Economic Profits

The difference between total revenues and total costs, including both explicit and implicit costs, indicating the profitability of a company beyond basic accounting measures.

Economic Losses

Financial losses that occur when the cost of production exceeds the revenue generated from sales.

Total Output

The total quantity of goods or services produced by a firm or economy in a given period.