Indicate whether each of the following statements regarding internal controls is true or false.
a)________ Cash receipts should be deposited in a bank when they reach a predetermined level of materiality.b)________ To improve operating efficiency, a company should make most of its disbursements using cash.c)________ Supporting documents should be reviewed by the check signer prior to signing the check.d)________ Supporting documentation should not be marked "paid" until the check clears the bank.e)________ All spoiled and voided checks should be shredded.

Question

Quizplus · Accepted Answer

b)False c)True d)False e)Fa)This is false. Depositing cash receipts in a bank should happen on a timely basis (rather than when they reach a predetermined level).b)This is false. Businesses use checks for most disbursements. They often establish a petty cash fund to maintain effective control over small cash disbursements.c)This is true. The check signer should examine supporting documents prior to signing.d)This is false. The supporting documents should be marked "paid" when the check is signed.e)This is false. Spoiled and voided checks should be defaced and retained. If defaced checks are not retained, an employee could steal a check and then claim it was written incorrectly and thrown away.

Indicate Whether Each of the Following Statements Regarding Internal Controls