Internal Controls and Cash Management Quiz

Test your knowledge on internal control procedures, cash management objectives, and techniques with this comprehensive quiz.

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Which of the following is an example of an internal control procedure for cash management?

Reconciling bank statements monthly

Using petty cash without documentation

Delaying deposits to maximize interest earned

Allowing multiple employees to access the cash register without supervision

What is the primary purpose of internal controls in cash management?

To prevent all errors and fraud

To ensure that all cash transactions are profitable

To safeguard assets and minimize errors and fraud

To increase cash flow by any means necessary

What is the purpose of a bank reconciliation statement in cash management?

To identify errors made by the bank

To keep track of employee salaries

To determine the company's profit

To determine the cost of goods sold

What is the purpose of a cash flow statement in cash management?

To provide details of cash transactions over a period

To track employee attendance

To calculate depreciation

To determine shareholder equity

Which of the following is a key element of internal controls for cash management?

Segregation of duties

Unrestricted access to cash

Minimal documentation of transactions

Informal approval processes

Why is it important for a business to have strong internal controls for cash management?

To reduce the need for external audits

To ensure compliance with tax regulations

To prevent errors, theft, and fraud

To increase the company's debt ratio

What is the purpose of a cash budget in cash management?

To track actual cash flows

To predict future cash flows

To limit cash transactions

To reconcile bank statements

Which of the following is NOT a common objective of cash management?

Minimizing cash holdings

Maximizing the availability of cash

Minimizing the cost of funds

Maximizing the amount of cash tied up in inventory

Which of the following is a key benefit of using electronic funds transfer (EFT) for cash management?

Increased risk of fraud

Reduced processing time and costs

Limited accessibility to funds

Decreased accuracy of transactions

#10

Which of the following is a characteristic of effective cash management?

Keeping large amounts of cash on hand

Delaying payments to vendors

Maximizing interest earned on idle cash balances

Ignoring accounts receivable

#11

Why is the segregation of duties important in cash management?

To increase employee workload

To decrease employee accountability

To prevent collusion and fraud

To simplify accounting procedures

#12

Which of the following is an example of a compensating control for cash management?

Regular reconciliation of accounts

Reducing the number of authorized signatories

Allowing one employee to handle all cash transactions

Disregarding internal audits

#13

What is the primary goal of cash concentration in cash management?

To disperse cash across different accounts

To consolidate cash into a single account

To eliminate the need for cash reserves

To encourage excess cash holdings