Which of the following is an appropriate internal control activity for cash?
A) The amount of cash on hand should be kept to a maximum.
B) All payments should be made with currency,not checks.
C) Banking facilities should be used as little as possible.
D) Recordkeeping and custodianship over cash should be performed by separate individuals.

Question

Quizplus · Accepted Answer

Separation of duties is an important internal control for cash as it mitigates the risk of fraud or error. The same person should not have custody over cash and be responsible for recordkeeping, as it increases the risk of misappropriation or manipulation. Therefore, it is best to have separate individuals perform the custodial and recordkeeping functions for cash. Options A, B, and C are not appropriate internal control activities for cash as they limit the usefulness and efficiency of cash transactions.

Which of the Following Is an Appropriate Internal Control Activity