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

7. Receivables and Investments

Types of Receivables

Financial Accounting

7. Receivables and Investments

Types of Receivables

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Multiple Choice

To maintain control of cash payments, all payments should be made by check except:

Payments for minor or incidental expenses (petty cash)

Payments for employee salaries

Payments for utility bills

Payments to suppliers for inventory purchases

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Verified step by step guidance

Understand the concept of cash control: Cash control refers to the measures taken by a business to ensure that cash transactions are properly authorized, recorded, and safeguarded.

Recognize the purpose of checks in cash control: Payments made by check provide a clear paper trail, making it easier to track and verify transactions, which is essential for maintaining control over cash payments.

Identify the exception to the rule: Payments for minor or incidental expenses, often referred to as petty cash, are typically excluded from the requirement to be made by check. This is because petty cash is used for small, everyday expenses where writing a check may be impractical.

Compare the other payment types: Payments for employee salaries, utility bills, and inventory purchases are significant transactions that require proper documentation and authorization, making checks the preferred method for these payments.

Conclude the reasoning: The exception for petty cash payments is based on practicality and efficiency, as these expenses are minor and do not warrant the administrative effort of issuing checks.