With a lock-box system:
A) customers send their checks by mail directly to a post office box controlled by the company.
B) the bank posts the deposits to the company's accounts receivable account.
C) company personnel never touch the incoming cash.
D) it takes more time for the cash to be deposited into the company's bank account.

Question

Quizplus · Accepted Answer

With a lock-box system, company personnel never touch the incoming cash, reducing the risk of internal fraud and improving the overall efficiency of the cash handling process. Option A is partially correct as customers do send their checks directly to a post office box, but it is controlled by a third-party processor, not the company itself. Option B is incorrect as banks do not post deposits to accounts receivable accounts, but to cash accounts. Option D is also incorrect as a lock-box system is designed to accelerate the collection and deposit of incoming cash, not to delay it.

With a Lock-Box System