Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 7 - Fraud, Internal Control, and Cash - Questions: 22

Answer

Yes! It is true that use of bank contributes to good internal control over cash. The other benefit of a bank account is that double record is maintained for all the transactions.

Work Step by Step

The company can safeguard its cash by using a bank as it will deposit the cash/checks and payments by cash / checks. With the use of bank account, the company minimizes the handling of currency and has to keep very little cash in the cash box. One by the company and the other by the bank. Hence any error in recording can be ascertained without any difficulty.
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