Question

the following are effective means of internal cash controls except ______.
a. using checks in pre - numbered sequence to help trace deposits back to the original document
b. having signature cards for all employees so anyone can make deposits
c. sending checks for verification
d. paying by electronic funds transfer

Explanation:

To determine the incorrect internal cash control, we analyze each option:

• Option A: Pre - numbered checks help in tracing deposits, which is a good internal control.
• Option B: Allowing anyone (all employees) to make deposits by having signature cards for everyone goes against the principle of segregation of duties in internal cash controls. This can lead to unauthorized or improper deposits.
• Option C: Sending checks for verification is a valid internal control measure to ensure the accuracy of checks.
• Option D: Paying by electronic funds transfer is a secure and effective way of cash control as it reduces the risk of physical cash handling and provides a clear audit trail.

Answer:

B. having signature cards for all employees so anyone can make deposits