Final answer:
In handling cash receipts, the main concern is preventing theft, which can occur at any stage, not just before recording. Deposits should be made frequently, not monthly, and the monthly statement doesn't prepare the cash receipts journal.
Step-by-step explanation:
When addressing the processing and recording of cash receipts, the primary concern involves ensuring the integrity of cash handling procedures to prevent theft. The assertion that theft can only occur prior to the entry of receipts is incorrect; in fact, theft can occur at any point in the cash handling process. It's crucial to implement strong internal controls to mitigate this risk.
Moreover, suggesting that cash receipts should only be deposited monthly is a poor practice. Generally, it is advised to deposit cash receipts daily or as soon as possible to reduce the risk of theft or loss. As for the use of the monthly statement, it's not typically used to prepare the cash receipts journal. Instead, the cash receipts journal is updated regularly as transactions occur to maintain real-time accuracy. Individual receipts are recorded, and the total is reconciled with deposit records and bank statements routinely to ensure accuracy.
The effective management of cash receipts is essential not only for theft prevention but also for accurate bookkeeping and financial management. Establishing regular reconciliations and prompt depositing practices contributes to this objective substantially, maintaining both security and financial clarity.