Question

Why is internal control over cash important?

1) To prevent theft and fraud
2) To ensure accurate financial records
3) To maintain accountability
4) All of the above

Answer 1

Internal control over cash is critical to safeguard resources from theft and fraud, guarantee accurate financial records, and uphold accountability, thus making all listed options correct.

Step-by-step explanation:

Internal control over cash is of paramount importance for any business for several reasons:

• To prevent theft and fraud, which protects the resources of the company.
• To ensure accurate financial records, which are essential for the proper management of the business and statutory compliance.
• To maintain accountability among the staff and the management, which in turn helps in streamlining business processes and ensuring ethical practices.