#1
Which of the following is an example of an internal control procedure for cash management?
Reconciling bank statements monthly
ExplanationEnsures accuracy and detects discrepancies.
#2
What is the primary purpose of internal controls in cash management?
To safeguard assets and minimize errors and fraud
ExplanationProtects resources and prevents misuse.
#3
What is the purpose of a bank reconciliation statement in cash management?
To identify errors made by the bank
ExplanationEnsures bank transactions align with records.
#4
What is the purpose of a cash flow statement in cash management?
To provide details of cash transactions over a period
ExplanationSummarizes cash inflows and outflows.
#5
Which of the following is a key element of internal controls for cash management?
Segregation of duties
ExplanationPrevents single individuals from controlling all aspects.
#6
Why is it important for a business to have strong internal controls for cash management?
To prevent errors, theft, and fraud
ExplanationMaintains financial integrity and trust.
#7
What is the purpose of a cash budget in cash management?
To predict future cash flows
ExplanationFacilitates planning and decision-making.
#8
Which of the following is NOT a common objective of cash management?
Maximizing the amount of cash tied up in inventory
ExplanationAims to optimize cash utilization.
#9
Which of the following is a key benefit of using electronic funds transfer (EFT) for cash management?
Reduced processing time and costs
ExplanationImproves efficiency and lowers expenses.
#10
Which of the following is a characteristic of effective cash management?
Maximizing interest earned on idle cash balances
ExplanationOptimizes returns on available funds.
#11
Why is the segregation of duties important in cash management?
To prevent collusion and fraud
ExplanationEnsures checks and balances.
#12
Which of the following is an example of a compensating control for cash management?
Regular reconciliation of accounts
ExplanationActs as a backup measure.
#13
What is the primary goal of cash concentration in cash management?
To consolidate cash into a single account
ExplanationCentralizes funds for better control and visibility.