Which of the Following Is an Appropriate Internal Control Activity

question 117

Multiple Choice

Which of the following is an appropriate internal control activity for cash?

• A)Recordkeeping and custodianship over cash should be performed by the same person.
• B)The amount of cash on hand should be kept to a minimum.
• C)Banking facilities should be used as little as possible.
• D)All payments should be made with currency,not checks.

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Definitions:

Working Capital

Current assets less current liabilities.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its short-term assets.

Acid-Test Ratio

A financial ratio indicating a firm's capacity to settle short-term debts without having to sell its stock.

Marketable Securities

Financial instruments that can be easily converted to cash, such as stocks, bonds, and Treasury bills.