Question

Ideally, payroll checks are written on a special bank account used only for payroll. True or False?

Answer 1

True, Ideally, payroll checks should be written on a special bank account used only for payroll to manage cash flow, prevent fraud, and ensure compliance with tax regulations.

Step-by-step explanation:

True. It is often recommended to write payroll checks on a special bank account dedicated solely to payroll. This special payroll account helps in simplifying the accounting process, managing cash flow, and ensuring that there are always sufficient funds available to cover payroll obligations. The use of a separate account for payroll can provide businesses with a clear audit trail, prevent fraud, and facilitate compliance with tax regulations. In addition, it can help avoid issues that might arise from having insufficient funds, such as overdraft fees.