Payment by check is an important internal control over cash payments because:

• A. it provides a written record and requires authorization, reducing the risk of unauthorized payments.
• B. it ensures that all payments are made in cash only.
• C. it allows employees to access cash more quickly.
• D. it eliminates the need for bank reconciliations.

Answer: (A)

Verified step by step guidance

1. Understand the concept of internal control over cash payments: Internal control refers to procedures and mechanisms designed to safeguard assets, ensure accurate financial reporting, and prevent fraud or unauthorized transactions.
2. Analyze the role of payment by check: Payment by check provides a written record of the transaction, which can be used for verification and auditing purposes. It also requires authorization, ensuring that payments are approved by the appropriate personnel.
3. Evaluate the incorrect options: Consider why the other options are not correct. For example, payment by check does not ensure that all payments are made in cash, nor does it allow employees to access cash more quickly. Additionally, it does not eliminate the need for bank reconciliations, as checks still need to be reconciled with bank statements.
4. Focus on the correct answer: Payment by check reduces the risk of unauthorized payments by requiring authorization and providing a written record, which aligns with the principles of internal control.
5. Summarize the importance of checks in internal control: Checks are a key tool in maintaining accountability and preventing fraud, as they create a paper trail and require proper authorization before funds are disbursed.