Question

Payroll checks are typically drawn on

a.the regular checking account
b.a payroll imprest account
c.a wages payable account
d.petty cash

Answer 1

Payroll checks are usually drawn on a payroll imprest account, which is separate from regular business transactions and designed exclusively for payroll. Banks offer checking accounts for everyday transactions and savings accounts for earning interest, with some accounts blending the characteristics of both.

Step-by-step explanation:

Payroll checks are typically drawn on a payroll imprest account. This special bank account is solely used for payroll purposes and is regularly funded to match the exact amount needed for payroll checks each pay period. This system helps companies control access to funds and simplifies the reconciliation of the payroll bank account since it separates payroll transactions from regular business transactions.

Banks facilitate transactions by giving easy access to money through a checking account where you can write checks or use a debit card. The functionality of checking and savings accounts has evolved, as banks now offer checking accounts that pay interest similar to savings accounts if certain balances are maintained, and savings accounts that allow limited check writing. These banking services ensure that businesses can operate efficiently without needing to manage large amounts of cash for transactions like payroll.