Question 1

The auditor uses a proof of cash to determine whether

Accepted Answer

A) internal controls over cash have been functioning effectively in the period under audit. 
B) all recorded cash receipts were deposited and whether all recorded cash disbursements were paid by the bank. 
C) accounts receivable was properly recorded and whether cash receipts transactions were properly recorded. 
D) accounts payable was properly recorded and whether cash disbursement transactions were properly recorded. 
A) internal controls over cash have been functioning effectively in the period under audit. 
B) all recorded cash receipts were deposited and whether all recorded cash disbursements were paid by the bank. 
C) accounts receivable was properly recorded and whether cash receipts transactions were properly recorded. 
D) accounts payable was properly recorded and whether cash disbursement transactions were properly recorded.

Question 2

The most important internal control for petty cash is

Accepted Answer

A) the use of an imprest fund that is the responsibility of one individual. 
B) keeping it in a safe or locked drawer. 
C) keeping the amount of cash to a minimum. 
D) accessibility so that cheques won't have to be written for small amounts. 
A) the use of an imprest fund that is the responsibility of one individual. 
B) keeping it in a safe or locked drawer. 
C) keeping the amount of cash to a minimum. 
D) accessibility so that cheques won't have to be written for small amounts.

Question 3

In addition to the possibility of kiting,inaccurate handling of bank transfers could result in

Accepted Answer

A) a misclassification between cash and accounts receivable. 
B) an incorrect balance in the accounts receivable account. 
C) a misclassification between cash and accounts payable. 
D) an incorrect balance in the bank loan account. 
A) a misclassification between cash and accounts receivable. 
B) an incorrect balance in the accounts receivable account. 
C) a misclassification between cash and accounts payable. 
D) an incorrect balance in the bank loan account.

Question 4

Jane works for Middle Co.She is responsible for opening the mail and preparing the bank deposit for cheques received,which she then gives to the owner.After the owner has deposited the cash,he gives Jane the stamped bank deposit slip,which she uses to record the cash received in the accounts receivable records.How does this allocation of responsibilities affect the audit process?

Accepted Answer

A) The auditor should increase control testing with respect to the accuracy assertion. 
B) The auditor should do substantive tests (compare the deposit slips to the accounts receivable records). 
C) The auditor should consider the possibility of material fraud. 
D) The auditor should increase control testing with respect to the completeness assertion. 
A) The auditor should increase control testing with respect to the accuracy assertion. 
B) The auditor should do substantive tests (compare the deposit slips to the accounts receivable records). 
C) The auditor should consider the possibility of material fraud. 
D) The auditor should increase control testing with respect to the completeness assertion.

Question 5

The audit procedure that requires the auditor to record the last cheque number used on the last day of the year and subsequently trace to the outstanding cheques and the cash disbursements journal is performed to satisfy the audit objective of

Accepted Answer

A) detail tie-in. 
B) existence. 
C) completeness. 
D) allocation. 
A) detail tie-in. 
B) existence. 
C) completeness. 
D) allocation.

Question 6

Following are situations that an auditor might find by means of tests of controls or tests of details of cash balances for a company with a December year end.A)The accountant did not record or deposit a cash receipt for $50 000 that was received on December 28.Cash is prelisted by the receptionist.B)Cheques prepared up to January 6 were dated December 31 and recorded in the cash disbursements journal.C)A cheque was issued for office supplies that were never received by the client.
Required:
List a substantive audit procedure that could uncover each of the preceding situations.

Accepted Answer

A)Trace the prelisting of cash to the ca

Question 7

After the bank confirmation has been received by the auditor,the auditor should

Accepted Answer

A) recalculate the bank reconciliation in its entirety. 
B) verify that cash cutoff was correct for that bank account. 
C) trace the general ledger cash account balance to the amount confirmed. 
D) trace the bank reconciliation cash amount to the amount confirmed. 
A) recalculate the bank reconciliation in its entirety. 
B) verify that cash cutoff was correct for that bank account. 
C) trace the general ledger cash account balance to the amount confirmed. 
D) trace the bank reconciliation cash amount to the amount confirmed.

Question 8

Bank reconciliations are normally verified on a 100-percent basis.Testing the reasonableness of the cash balance is therefore

Accepted Answer

A) less important than for most other audit areas. 
B) more important than for other audit areas. 
C) equally as important as other audit areas. 
D) less important than for the audit of other assets but more important than the audit of liabilities. 
A) less important than for most other audit areas. 
B) more important than for other audit areas. 
C) equally as important as other audit areas. 
D) less important than for the audit of other assets but more important than the audit of liabilities.

The auditor uses a proof of cash to determine whether

The most important internal control for petty cash is

In addition to the possibility of kiting,inaccurate handling of bank transfers could result in

The audit procedure that requires the auditor to record the last cheque number used on the last day of the year and subsequently trace to the outstanding cheques and the cash disbursements journal is performed to satisfy the audit objective of

After the bank confirmation has been received by the auditor,the auditor should

Bank reconciliations are normally verified on a 100-percent basis.Testing the reasonableness of the cash balance is therefore

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Professional Ethics and Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Client Acceptance,Planning,and Materiality

Assessing the Risk of Material Misstatement

Internal Control and COSO Framework

Assessing Control Risk and Designing Test of Controls

Develop Risk Response: Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters

Exam 17: Audit of Cash Balances

The auditor uses a proof of cash to determine whether

The most important internal control for petty cash is

In addition to the possibility of kiting,inaccurate handling of bank transfers could result in

The audit procedure that requires the auditor to record the last cheque number used on the last day of the year and subsequently trace to the outstanding cheques and the cash disbursements journal is performed to satisfy the audit objective of

After the bank confirmation has been received by the auditor,the auditor should

Bank reconciliations are normally verified on a 100-percent basis.Testing the reasonableness of the cash balance is therefore

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Professional Ethics and Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Client Acceptance,Planning,and Materiality

Assessing the Risk of Material Misstatement

Internal Control and COSO Framework

Assessing Control Risk and Designing Test of Controls

Develop Risk Response: Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of the Capital Acquisition and Repayment Cycle

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters