ACC: 9-1 Safeguarding Cash

What is the primary reason businesses need to establish internal controls?

• To hire more employees

• To expand their business internationally

• To safeguard their assets and minimize errors

• To increase their sales

What act helped restore confidence in financial markets by addressing accounting errors?

• The Fair Labor Standards Act

• The Dodd-Frank Act

• The Securities Act of 1933

• The Sarbanes-Oxley Act of 2002

What is a critical component of internal controls?

• Product development

• Employee benefits

• Marketing strategies

• Cash control

What is one of the benefits of storing cash in a business bank account?

• Automatic profit increase

• FDIC insurance up to $250,000

• Free advertising

• Unlimited withdrawals

Why is the separation of duties important in cash management?

• It reduces the risk of errors and theft

• It simplifies accounting processes

• It makes it easier to fire employees

• It increases employee satisfaction

What is the purpose of rotating employee positions in cash handling?

• To increase the speed of transactions

• To make accounting more complex

• To prevent role fatigue and mismanagement

• To reduce the number of employees needed

What does a bank reconciliation process help ensure?

• The accuracy of financial statements

• More loans available to the business

• Faster bank transactions

• Higher interest rates on savings

Why is maintaining a strict separation of personal and business expenses important?

• To ensure employees are happy

• To increase personal wealth

• To make accounting easier for banks

• To safeguard company cash and keep financial statements accurate

How do computerized systems help in safeguarding cash?

• By reducing human interaction and mismanagement

• By increasing cash flow

• By eliminating the need for bank accounts

• By automatically paying taxes

What makes cash a high-risk asset?

• Its lack of acceptance

• Its difficulty to use

• Its high liquidity and risk of mismanagement

• Its low value