Question 1

Bank reconciliations should be performed by the individual who makes bank deposits.

Accepted Answer

A) True 
 B)False

Question 2

Electronic Funds Transfers have controls built into the process and do not require further reconciliation by the client.

Accepted Answer

A) True 
 B)False

Question 3

All marketable securities are carried at fair market value on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following would not be included as part of the documentation related to the substantive procedures for marketable securities?

Accepted Answer

A)  A schedule of marketable securities prepared by the client. 
B)  Reports of any outside valuation experts. 
C)  Calculation of any potential impairments. 
D)  Policies over purchase or sale of marketable securities. 
A)  A schedule of marketable securities prepared by the client. 
B)  Reports of any outside valuation experts. 
C)  Calculation of any potential impairments. 
D)  Policies over purchase or sale of marketable securities.

Question 5

The standard bank confirmation should be sent to all banks used by the client during the year except those with a zero balance.

Accepted Answer

A) True 
 B)False

Question 6

The valuation assertion is most relevant to the audit of marketable securities.

Accepted Answer

A) True 
 B)False

Question 7

Bank transfer schedules are used by the auditor to address which of the following concerns?

Accepted Answer

A)  Lapping. 
B)  Kiting. 
C)  Embezzlement by omitting outstanding checks on reconciliation. 
D)  All of the above. 
A)  Lapping. 
B)  Kiting. 
C)  Embezzlement by omitting outstanding checks on reconciliation. 
D)  All of the above.

Question 8

A lockbox is a mailbox type of depository device that is located in front of the client's premises, allowing customers to remit payment in a timely manner.

Accepted Answer

A) True 
 B)False

Question 9

Lockbox utilization.
Describe the cash management technique of a lockbox, including why it is used.

Accepted Answer

When using a lockbox system to accelerat

Question 10

A turnaround document is an effective control because it lists useful information for further processing of the collection on account.

Accepted Answer

A) True 
 B)False

Question 11

The standard bank confirmation includes a designated place for the financial institution to report which of the following?

Accepted Answer

A)  Loans and collateral. 
B)  A reconciliation of the lockbox. 
C)  Cash held on consignment. 
D)  Maturity dates for certificates of deposit. 
A)  Loans and collateral. 
B)  A reconciliation of the lockbox. 
C)  Cash held on consignment. 
D)  Maturity dates for certificates of deposit.

Question 12

The valuation/allocation and completeness assertions are usually the most relevant for auditing cash.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following items would not normally appear on bank reconciliations?

Accepted Answer

A)  Balance per bank. 
B)  Outstanding deposits list. 
C)  Balance per books. 
D)  Outstanding checks list. 
A)  Balance per bank. 
B)  Outstanding deposits list. 
C)  Balance per books. 
D)  Outstanding checks list.

Question 14

Which of the following would not be used as part of analytical procedures for marketable securities?

Accepted Answer

A)  Develop expectations about the level of amounts in ending balances. 
B)  Develop expectations about the relationship between the balances. 
C)  Verify ending balances prior to calculating the percent change. 
D)  Review changes in the balances, risk composition, and classification types. 
A)  Develop expectations about the level of amounts in ending balances. 
B)  Develop expectations about the relationship between the balances. 
C)  Verify ending balances prior to calculating the percent change. 
D)  Review changes in the balances, risk composition, and classification types.

Question 15

Which of the following would be used by the auditor to address kiting?

Accepted Answer

A)  Cut-off bank reconciliations. 
B)  Bank transfer schedules. 
C)  Bank confirmations-account balances. 
D)  Bank confirmations-loan guarantees. 
A)  Cut-off bank reconciliations. 
B)  Bank transfer schedules. 
C)  Bank confirmations-account balances. 
D)  Bank confirmations-loan guarantees.

Question 16

Which one of the following risks is not a risk associated with cash?

Accepted Answer

A)  The large volume of transactions. 
B)  Importance of meeting debt covenants. 
C)  Valuation issues are typically complex. 
D)  Easy to manipulate. 
A)  The large volume of transactions. 
B)  Importance of meeting debt covenants. 
C)  Valuation issues are typically complex. 
D)  Easy to manipulate.

Question 17

Internal audits are seldom an effective deterrent to the theft of cash.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following best describes a fraudulent cash scheme to overstate cash assets at year end by recording deposits in transit in both the account from which the cash is withdrawn and the account to which it is transferred?

Accepted Answer

A)  Lapping of cash. 
B)  Kiting of cash. 
C)  Embezzlement of cash. 
D)  Restrictive endorsements of cash. 
A)  Lapping of cash. 
B)  Kiting of cash. 
C)  Embezzlement of cash. 
D)  Restrictive endorsements of cash.

Question 19

Which of the following is not an internal control the auditor would expect to find in place for all cash processing systems?

Accepted Answer

A)  Restrictive endorsement of checks. 
B)  Independent reconciliation. 
C)  Walkthrough. 
D)  Prenumbered cash receipt documents. 
A)  Restrictive endorsement of checks. 
B)  Independent reconciliation. 
C)  Walkthrough. 
D)  Prenumbered cash receipt documents.

Question 20

As cash processing systems become more automated and integrated, which of the following is true about the general concept of segregation of duties?

Accepted Answer

A)  Segregation of duties becomes less important. 
B)  Segregation of duties becomes more important. 
C)  The importance of segregation of duties does not change. 
D)  Segregation of duties becomes completely computerized without human involvement. 
A)  Segregation of duties becomes less important. 
B)  Segregation of duties becomes more important. 
C)  The importance of segregation of duties does not change. 
D)  Segregation of duties becomes completely computerized without human involvement.

Bank reconciliations should be performed by the individual who makes bank deposits.

Electronic Funds Transfers have controls built into the process and do not require further reconciliation by the client.

All marketable securities are carried at fair market value on the balance sheet.

Which of the following would not be included as part of the documentation related to the substantive procedures for marketable securities?

The standard bank confirmation should be sent to all banks used by the client during the year except those with a zero balance.

The valuation assertion is most relevant to the audit of marketable securities.

Bank transfer schedules are used by the auditor to address which of the following concerns?

A lockbox is a mailbox type of depository device that is located in front of the client's premises, allowing customers to remit payment in a timely manner.

Lockbox utilization. Describe the cash management technique of a lockbox, including why it is used.

A turnaround document is an effective control because it lists useful information for further processing of the collection on account.

The standard bank confirmation includes a designated place for the financial institution to report which of the following?

The valuation/allocation and completeness assertions are usually the most relevant for auditing cash.

Which of the following items would not normally appear on bank reconciliations?

Which of the following would not be used as part of analytical procedures for marketable securities?

Which of the following would be used by the auditor to address kiting?

Which one of the following risks is not a risk associated with cash?

Internal audits are seldom an effective deterrent to the theft of cash.

Which of the following best describes a fraudulent cash scheme to overstate cash assets at year end by recording deposits in transit in both the account from which the cash is withdrawn and the account to which it is transferred?

Which of the following is not an internal control the auditor would expect to find in place for all cash processing systems?

As cash processing systems become more automated and integrated, which of the following is true about the general concept of segregation of duties?

Auditing: Integral to the Economy

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditors

Professional Liability, Auditor Judgment Frameworks, and Professional Responsibilities

Professional Auditing Standards and the Audit Opinion Formulation Process

A Framework for Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Debt Obligations and Stockholders Equity Transactions

Activities Required in Completing a Quality Audit

Audit Reports on Financial Statements

Advanced Topics Concerning Complex Auditing Judgments

Other Services Provided by Audit Firms

Filters

Exam 10: Auditing Cash and Marketable Securities

Bank reconciliations should be performed by the individual who makes bank deposits.

Electronic Funds Transfers have controls built into the process and do not require further reconciliation by the client.

All marketable securities are carried at fair market value on the balance sheet.

Which of the following would not be included as part of the documentation related to the substantive procedures for marketable securities?

The standard bank confirmation should be sent to all banks used by the client during the year except those with a zero balance.

The valuation assertion is most relevant to the audit of marketable securities.

Bank transfer schedules are used by the auditor to address which of the following concerns?

A lockbox is a mailbox type of depository device that is located in front of the client's premises, allowing customers to remit payment in a timely manner.

Lockbox utilization. Describe the cash management technique of a lockbox, including why it is used.

A turnaround document is an effective control because it lists useful information for further processing of the collection on account.

The standard bank confirmation includes a designated place for the financial institution to report which of the following?

The valuation/allocation and completeness assertions are usually the most relevant for auditing cash.

Which of the following items would not normally appear on bank reconciliations?

Which of the following would not be used as part of analytical procedures for marketable securities?

Which of the following would be used by the auditor to address kiting?

Which one of the following risks is not a risk associated with cash?

Internal audits are seldom an effective deterrent to the theft of cash.

Which of the following best describes a fraudulent cash scheme to overstate cash assets at year end by recording deposits in transit in both the account from which the cash is withdrawn and the account to which it is transferred?

Which of the following is not an internal control the auditor would expect to find in place for all cash processing systems?

As cash processing systems become more automated and integrated, which of the following is true about the general concept of segregation of duties?

Auditing: Integral to the Economy

The Auditors Responsibilities Regarding Fraud and Mechanisms to Address Fraud: Regulation and Corporate Governance

Internal Control Over Financial Reporting: Responsibilities of Management and the External Auditors

Professional Liability, Auditor Judgment Frameworks, and Professional Responsibilities

Professional Auditing Standards and the Audit Opinion Formulation Process

A Framework for Audit Evidence

Planning the Audit: Identifying and Responding to the Risks of Material Misstatement

Specialized Audit Tools: Sampling and Generalized Audit Software

Auditing the Revenue Cycle

Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

Auditing Long-Lived Assets: Acquisition, Use, Impairment, and Disposal

Auditing Debt Obligations and Stockholders Equity Transactions

Activities Required in Completing a Quality Audit

Audit Reports on Financial Statements

Advanced Topics Concerning Complex Auditing Judgments

Other Services Provided by Audit Firms

Filters