Final answer:
A critical element of internal control over collections of accounts receivables is the separation of cash-handling and accounting duties, which mitigates the risk of misappropriation or errors. Option b
Step-by-step explanation:
The critical element of internal control over collections of accounts receivables is b) the separation of cash-handling and cash-accounting duties. This is a fundamental principle of internal control that ensures no individual has control over both the recording of cash and the physical custody of cash, thereby reducing the risks of misappropriation or errors.
Depository institutions play a crucial role in financial markets by allowing individuals and businesses to deposit funds into a demand deposit or savings account, making financial transactions more convenient and secure through checkable deposits and withdrawal options.
By having a separation of duties, we mitigate the risks associated with handling cash and managing the records of those transactions. It's similar to why businesses and individuals diversify their investments—to reduce the risk of adverse effects from concentrated positions.
Additionally, keeping up with regular balancing of one's checkbook helps manage cash flow and prevent overdraft fees, demonstrating the importance of careful financial record-keeping. Option b