Audit and Assurance Practice Exam

What type of account is typically used to manage most cash transactions?

1. Saving account

2. General checking account

3. Investment account

4. Money market account

The correct answer is: General checking account

A general checking account is designed specifically for managing day-to-day cash transactions. This type of account allows for easy access to funds through methods such as writing checks, using a debit card, and online banking. It often has low or no minimum balance requirements and provides a high level of liquidity, making it ideal for frequent deposits and withdrawals. In contrast, a savings account is primarily intended to encourage savings by offering interest on deposited funds but typically has limitations on the number of withdrawals allowed. An investment account focuses on trading securities and investments rather than handling cash transactions. A money market account usually offers higher interest rates than a traditional checking account but may also have limited transaction capabilities and higher minimum balance requirements. Therefore, the general checking account is the most suitable option for managing regular cash transactions efficiently.