Exam 18: Auditing Investments and

A broker's advice is issued monthly by a broker specifying securities held in safekeeping by the broker, their cost, and their fair market value at the end of the month.

(True/False)

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Question 81

For investments accounted for using the equity method:

(Multiple Choice)

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Question 82

The term window dressing refers to the client's deliberate attempt to overstate short-term solvency at year-end.

(True/False)

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Question 83

The specific audit objective, the entity has legal title to all cash balances shown at the balance sheet date, is derived from the:

(Multiple Choice)

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Question 84

Complete the chart below by fully labeling the T accounts:

(Essay)

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Question 85

In working with the bank reconciliation and the bank cutoff statement, the auditor finds that many of the checks on the outstanding checklist did not clear during the cutoff period. This may be an indication of:

(Multiple Choice)

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(76)

Question 86

Conditions conducive to lapping exist when an individual who handles cash receipts also maintains the accounts receivable ledger.

(True/False)

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(80)

Question 87

Misrepresentation of the class of investment of equity securities, as held-to-maturity versus available-for-sale :

(Multiple Choice)

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Question 88

When detection risk is very low, the auditor should:

(Multiple Choice)

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Question 89

The control of all funds during the count of cash on hand is meant primarily to prevent:

(Multiple Choice)

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Question 90

For each of the following substantive tests of balances, indicate the financial statement assertions, Answers may be used once, more than once, or not at all.

Perform analytical procedures on investment balances.

EO ─ Existence or Occurrence

Recalculate investment revenue earned.

VA ─ Valuation or Allocation

Inspect and count securities on hand.

C ─ Completeness

Correct Answer:

Verified

Perform analytical procedures on investment balances.

Recalculate investment revenue earned.

Inspect and count securities on hand.

Vouch entries in investment accounts.

Confirm securities held by others.

Perform cash cutoff tests.

Count undeposited cash on hand and determine that such amounts are included in cash balances.

Confirm bank deposit and loan balances with banks.

Confirm other arrangements with banks.

Scan, review, or prepare bank reconciliations as appropriate.

(Matching)

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(82)

Question 91

The standard bank confirmation, developed jointly by the AICPA, the American Bankers Association, and the Bank Administration Institute, requests information about all of the following except:

(Multiple Choice)

4.8/5

(71)

Question 92

A broker's advice is issued monthly by a broker specifying securities held in safekeeping by the broker, their cost, and their fair market value at the end of the month.

For investments accounted for using the equity method:

The term window dressing refers to the client's deliberate attempt to overstate short-term solvency at year-end.

The specific audit objective, the entity has legal title to all cash balances shown at the balance sheet date, is derived from the:

Complete the chart below by fully labeling the T accounts:

In working with the bank reconciliation and the bank cutoff statement, the auditor finds that many of the checks on the outstanding checklist did not clear during the cutoff period. This may be an indication of:

Conditions conducive to lapping exist when an individual who handles cash receipts also maintains the accounts receivable ledger.

Misrepresentation of the class of investment of equity securities, as held-to-maturity versus available-for-sale :

When detection risk is very low, the auditor should:

The control of all funds during the count of cash on hand is meant primarily to prevent:

The standard bank confirmation, developed jointly by the AICPA, the American Bankers Association, and the Bank Administration Institute, requests information about all of the following except:

Auditing and the Public Accounting

Financial Statement Audits and

Professional Ethics

Auditors Legal Liability

Overview of the Audit Process

Audit Evidence, Audit Objectives,

Accepting the Engagement and

Materiality Decisions and Performing Analytical Procedures

Audit Risk, Including the Risk of Fraud

Understanding Internal Controls

Audit Procedures in Response to Assessed Risks: Tests of Controls

Audit Procedures in Response to Assessed Risks: Substantive Tests

Audit Sampling in Substantive Tests

Auditing the Revenue Cycle

Auditing the Expenditure Cycle

Auditing the Production and

Auditing the Investing and

Completing the Audit and Postaudit

Attest and Assurance Services, and Related Reports

Internal, Operational, and

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