Internal controls that address liquidity risk include:
A)Sales and cash collections budgets.
B)Aggressive collection policies.
C)Both sales and cash collections budgets and aggressive collection policies.
D)Neither sales and cash collections budgets nor aggressive collection policies.

Question

Quizplus · Accepted Answer

Sales and cash collections budgets provide a clear picture of incoming cash flows, which can prevent a liquidity crisis. Aggressive collection policies ensure that outstanding receivables are collected in a timely manner, increasing the availability of cash to the organization. Both of these internal controls address liquidity risk.

Internal Controls That Address Liquidity Risk Include