Q7.25: why are payments through checks and/or electronic fund transfers (efts) the best method for expenses that are not incidental?

The checks and electronic fund transfers are the best methods of payment for not incidental expenses because it ensures better internal control over cash disbursement.

Further Explanation:

Internal control: It is a process of establishing control over organization activities. Business deals with different kinds of activities. The management of the company should control and manage the activities to ensure the effective performance of every activity. The control over these activities is known as an internal control. The internal controls over cash disbursement are:

•Segregation of Duties

•Authorization and Processing of Disbursements

•Managing Restricted Funds

•Check Signing

•Internal Accounting Controls Checklist

Incidental expenses refer to small expenditures that are associated with the business. Since the expenses are of small amount related to the these can be paid by cash. If expenses are of large amount and are not incidental, it is better to pay them with electronic fund transfer or check to have better authenticity of the transaction. It states better control over cash activities.

Therefore, the checks and electronic fund transfers are the best methods of payment for not incidental expenses as they ensure better internal control.

Learn more:

1.Learn more about the ethical dilemma

2.Learn more about the recording of bank-related transactions

3.Learn more about the national retail bank

Answer details:

Grade: High School

Subject: Auditing

Chapter: Internal control

Keywords: Checks and electronic fund transfers, best methods of payment, not incidental expenses, internal control, cash disbursement.

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