Which of the following is a reason that businesses use bank accounts as part of their internal control measures.
A) The bank records incoming checks as liabilities.
B) Customer's returned checks can be charged an NSF fee.
C) Bank accounts are an independent record of cash transactions.
D) Differences between the company balance and the bank balance will automatically indicate fraud.

Question

Quizplus · Accepted Answer

Bank accounts provide an independent record of cash transactions, which is important for internal control measures as it allows for a comparison between the company's records and the bank's records. This helps to identify any discrepancies and potential issues with cash handling or record-keeping. Option A is incorrect because the bank records incoming checks as assets, not liabilities. Option B is incorrect because charging an NSF fee does not necessarily relate to internal control measures. Option D is incorrect because differences between the company balance and bank balance could be due to a variety of reasons and do not automatically indicate fraud.

Which of the Following Is a Reason That Businesses Use