Describe the nature of a bank account and its use in controlling cash. A major reason that companies use bank accounts is for internal control. Some of the control advantages of using bank accounts are as follows: 1. Bank accounts reduce the amount of cash on hand. 2. Bank accounts provide an independent recording of cash transactions. Reconciling the balance of the cash account in the company's records with the cash balance according to the bank is an important control. 3. Use of bank accounts facilitates the transfer of funds using EFT systems.
Describe the nature of a bank account and its use in controlling cash. A major reason that companies use bank accounts is for internal control. Some of the control advantages of using bank accounts are as follows: 1. Bank accounts reduce the amount of cash on hand. 2. Bank accounts provide an independent recording of cash transactions. Reconciling the balance of the cash account in the company's records with the cash balance according to the bank is an important control. 3. Use of bank accounts facilitates the transfer of funds using EFT systems.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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
Transcribed Image Text:Describe the nature of a bank account and its use in controlling cash.
A major reason that companies use bank accounts is for internal control. Some of the control
advantages of using bank accounts are as follows:
1. Bank accounts reduce the amount of cash on hand.
2. Bank accounts provide an independent recording of cash transactions. Reconciling the balance
of the cash account in the company's records with the cash balance according to the bank is an
important control.
3. Use of bank accounts facilitates the transfer of funds using EFT systems.
DELL
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