Which One of the Following Statements Is True

question 136

Multiple Choice

Which one of the following statements is true?

• A) Good cash management practices dictate that a company should maintain as large a balance as possible in its cash account.
• B) Sound internal control practice dictates that disbursements should be made by check.
• C) The person handling the cash should also prepare the bank reconciliation.
• D) Petty cash can be substituted for a checking account to expedite the payment of all disbursements.

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Definitions:

Compounded Quarterly

A method of calculating interest where the accumulated interest is added to the principal sum every quarter (every three months), affecting the amount on which future interest is calculated.

Principal

The initial amount of money loaned or invested, excluding any interest or dividends.

Interest

The charge for borrowing money or the return on investment, typically expressed as a percentage.

Maturity Value

The total amount that will be paid out or received at the end of an investment period, including principal and interest.