Question

which element of internal control deals with a company having large amounts of cash on hand? a) risk assessment b) control activities c) control environment d) information and communication

Explanation:

To determine the correct element of internal control for a company with large amounts of cash on hand, we analyze each option:

• Option A (Risk assessment): Risk assessment involves identifying and analyzing risks that could affect the achievement of objectives. A company having large cash on hand faces risks like theft or misappropriation. Assessing these risks is part of risk assessment.
• Option B (Control activities): Control activities are the policies and procedures to mitigate risks (e.g., segregation of duties, authorization). But the question is about identifying the element related to the risk of having large cash, not the controls to mitigate it.
• Option C (Control environment): It's the overall tone of the organization, like integrity and ethical values. It doesn't directly relate to the risk of holding large cash.
• Option D (Information and communication): Involves sharing financial and operational info. Not related to the risk of large cash on hand.

So, risk assessment deals with identifying the risks associated with having large cash on hand.

Answer:

A) Risk assessment