The accounts receivable clerk should be responsible for preparing the bank deposit.

• A. Sometimes
• B. True
• C. False
• D. Only for small deposits

Answer: (C)

The key idea here is segregation of duties in cash handling. Cash receipts are a custody function, while recording and reconciliations are separate controls. The person who handles and counts the actual cash and prepares the bank deposit should be different from the person who records payments in the accounts receivable system. If the accounts receivable clerk both prepares deposits and records payments, there’s an opportunity to misappropriate cash and also to hide errors because the same person oversees both the cash and the records. In practice, someone in cash receipts or the treasurer prepares the bank deposit, and the accounts receivable clerk applies payments to customer accounts and updates the AR ledger, with bank reconciliations performed by another party. Small organizations sometimes relax these controls, but the standard expectation is that the AR clerk should not be responsible for preparing bank deposits.