Question

Which of the following is/are true?

Multiple Choice

• All of the choices are correct.

• The primary internal control goal for cash receipts is to ensure that the business receives the appropriate amount of cash and safely deposits it in the bank.

• The operating cycle is a series of activities that a company undertakes to generate returns and, ultimately, revenues.

Answer 1

The primary internal control goal for cash receipts is to ensure that the business receives the appropriate amount of cash and safely deposits it in the bank.

Explanation:

The last option is incorrect because

The operating cycle is a series of activities that a company undertakes to generate revenues and, ultimately, cash. Therefore, a company cannot first produce returns and then revenues it is always the other way round.

This also makes the first choice incorrect.

The second option is true, the primary internal control goal for cash receipts is to ensure that the business receives the appropriate amount of cash and safely deposits it in the bank. The company should Deposit all cash receipts intact as soon as feasible, preferably on the day they are received or on the next business day. Undeposited cash is more susceptible to misappropriation.