Control over cash disbursements is generally more effective when: a) all bills are paid in cash

Business Feb 02, 2021

Control over cash disbursements is generally more effective when:

a) all bills are paid in cash.

b) disbursements are made by the accounts payable subsidiary clerk.

c) payments are made by check.

d) all purchases are made on credit.

Expert Solution

The correct answer is option c) payments are made by check.

Control of cash disbursement is generally more effective when payments are made by check. Good internal control of cash means the establishment of responsibility. This responsibility means the designation of personnel authorized to issue and sign a check. To strengthen internal control of cash, segregation of duties is necessary. Under segregation of duties, different individuals must approve the said check. Also, proper documentation should be made. Checks must be prenumbered and account for them in sequence.

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