Use of a Lockbox

Veronica Products directs its customers to mail all payments to a P.O. box that is an address for a lockbox.

1a. Use of a Lockbox #1

Each day the contents of the lockbox are removed and processed by:

Multiple Choice: A) Veronica Products assistant controller) or B) Veronica Products accounts receivable department personnel) or C) Veronica Products payment processing department personnel) or D) Veronica Products commercial bank)

1b. Use of a Lockbox #2

Which of the following risks is reduced by the use of a lockbox?

Multiple Choice: A) Goods shipped will not be billed and collected in a timely manner) or B) Customer receipts will not be properly reflected in the accounts receivable records) or C) Employees of Veronica Products will steal cash receipts from customers) or D) Credit memos will be issued to cover up thefts of cash receipts from customers)

1c. Use of a Lockbox #3

The use of a lockbox benefits Veronica Products by:

Multiple Choice: A) Increasing the need to segregate duties within the billing and accounts receivable functions) or B) Minimizing the amount of bad debt losses) or C) Depositing cash receipts in the companys bank account quickly) D) Reducing the amount of recordkeeping required relative to accounts receivable)