A Strong System of Internal Control Requires That All Payments

question 43

True/False

A strong system of internal control requires that all payments be made by check except those made from a carefully controlled cash fund, such as a petty cash fund.

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Definitions:

Sustainable Growth Rate

The maximum rate at which a company can grow its sales, earnings, and dividends without increasing its leverage or equity.

Dividend Payout Ratio

The fraction of net earnings a firm pays out to its shareholders in dividends, indicating how much money a company returns to shareholders versus reinvesting.

Financial Statement

An official documentation detailing the fiscal transactions and status of a company, individual, or another entity.

Retention Ratio

The portion of net income that is retained by a corporation rather than distributed to its shareholders as dividends.