Question

An entity with a large volume of customer remittances by mail could most likely reduce the risk of employee misappropriation of cash by usingA . a bank lockbox system. B . independently prepared mailroom prelists. C daily check summaries. D . employee fidelity bonds.

Answer 1

Answer: Option (a) is correct.

Explanation:

A bank lockbox system is a type of service that is provided by the banks to the companies for receiving the payments from customers.

Under this system, all the payments that is made by the customers are going towards the special post office box.

Then bank goes to the post box, recovering the payments that is made by the customers and process them, after that banks deposited those payments into the companies bank account.

A bank communicate to its processing center. And all the documents of remittance are properly scanned, incorporates all the payment information and all the clearing updates are communicated to accounts receivable. The companies lockbox data is restored every night for the secure data storage and easily access-able.