Final answer:
The correct answer is option b. The best internal control over cash payments is requiring multiple employees to be involved in both the approval and recording of cash disbursements. This provides a system of checks and balances, increases transparency and accountability, and reduces the risk of fraud and mistakes.
Step-by-step explanation:
Good Internal Control Over Cash Payments
Among the options provided, the one that would generally be considered a good internal control over cash payments is requiring multiple employees to be involved in the approval and recording of cash disbursements. This practice helps prevent fraud and errors because it creates a system of checks and balances. When one employee approves the transaction and another records it, there is more transparency and accountability, reducing the risk of embezzlement or mistakes. Additionally, this separation of duties ensures that no single employee has control over all aspects of the transaction, which is a key principle in safeguarding company assets.
Option a) is not recommended because allowing the same employee to both approve and record cash disbursements could lead to a lack of oversight and potential misuse of funds. Option c) is highly discouraged because conducting cash payments without any documentation goes against basic auditing and bookkeeping principles. Option d), having records exclusively in electronic format, can be part of a good internal control system, but on its own, it does not ensure the proper segregation of duties or oversight needed for controlling cash disbursements.