Final answer:
Safekeeping of cash receipts involves depositing cash late in the day in a night depository, making timely deposits at a bank, and minimizing on-premises cash. Assigning all cash-related tasks to one employee is not recommended due to the lack of checks and balances.
Step-by-step explanation:
The internal control procedures specifically designed for the safekeeping of cash receipts include the following actions:
- Cash collected late in the day should be deposited in a night depository: This minimizes the amount of cash kept on premises overnight, reducing risk.
- Deposit cash receipts in a bank in a timely manner: Regular deposits ensure that cash is secured within a depository institution and is not exposed to theft or loss on the business premises.
- Minimize the amount of cash held on the business premises: By doing this, a company can reduce the attractiveness of the premises to potential thieves and the potential loss from internal theft.
- Assign all functions associated with cash receipts and payments to one employee: This is actually poor internal control because it does not provide checks and balances from having multiple people involved in the transaction processes.
Effective internal control involves diversification of responsibilities among different employees to minimize the risk of error or fraud.