Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

6. Internal Controls and Reporting Cash

Fraud and the Fraud Triangle

Financial Accounting

6. Internal Controls and Reporting Cash

Fraud and the Fraud Triangle

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Multiple Choice

Payment by check is an important internal control over cash payments because:

it provides a written record and requires authorization, reducing the risk of unauthorized payments.

it ensures that all payments are made in cash only.

it allows employees to access cash more quickly.

it eliminates the need for bank reconciliations.

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Verified step by step guidance

Understand the concept of internal control over cash payments: Internal control refers to procedures and mechanisms designed to safeguard assets, ensure accurate financial reporting, and prevent fraud or unauthorized transactions.

Analyze the role of payment by check: Payment by check provides a written record of the transaction, which can be used for verification and auditing purposes. It also requires authorization, ensuring that payments are approved by the appropriate personnel.

Evaluate the incorrect options: Consider why the other options are not correct. For example, payment by check does not ensure that all payments are made in cash, nor does it allow employees to access cash more quickly. Additionally, it does not eliminate the need for bank reconciliations, as checks still need to be reconciled with bank statements.

Focus on the correct answer: Payment by check reduces the risk of unauthorized payments by requiring authorization and providing a written record, which aligns with the principles of internal control.

Summarize the importance of checks in internal control: Checks are a key tool in maintaining accountability and preventing fraud, as they create a paper trail and require proper authorization before funds are disbursed.