Important Elements of an Internal Control System for Cash Disbursements

question 132

Multiple Choice

Important elements of an internal control system for cash disbursements include each of the following except:

• A) Only authorized personnel should sign checks.
• B) All expenditures should be authorized before a check is prepared.
• C) All disbursements, other than very small disbursements, should be made by check.
• D) The same person that prepares the check should also record it in the proper journal.

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Definitions:

Dividends Account

An account in the general ledger that records the dividends paid out to shareholders during an accounting period.

Earnings

The net profits of a company after all expenses have been deducted from revenues.

Stockholders

Individuals or entities that own shares in a corporation, thereby having an ownership interest in the company.

Revenue Accounts

Accounts that track the income generated from normal business operations, including sales revenue, service revenue, and interest revenue.