Preparation of a proof of cash would not be useful in discovering differences between the actual and reported cash balances if the differences were due to:
A)deposits in transit.
B)collections on the company's behalf by the bank which are deposited directly to the company's account.
C)cash receipts that were not recorded in the relevant accounting records.
D)service charges.

Question

Quizplus · Accepted Answer

A proof of cash is a reconciliation tool that helps identify discrepancies between the bank statement and the company's cash records. If cash receipts were not recorded in the accounting records, they would not appear in the proof of cash, making it ineffective in discovering such differences.

Preparation of a Proof of Cash Would Not Be Useful