Question 1

When auditing marketable securities, the auditor will do which of the following?

Accepted Answer

A)  Examine broker's advices evidencing purchase of securities. 
B)  Recompute income. 
C)  Foot schedule. 
D)  Both A and B. 
E)  All of the above. 
A)  Examine broker's advices evidencing purchase of securities. 
B)  Recompute income. 
C)  Foot schedule. 
D)  Both A and B. 
E)  All of the above.

Question 2

Which one of the following is not a fundamental internal control the auditor would expect to find in place for a cash processing system?

Accepted Answer

A)  Segregation of duties 
B)  Electronic payments 
C)  Authorization of transactions 
D)  Periodic internal audits 
A)  Segregation of duties 
B)  Electronic payments 
C)  Authorization of transactions 
D)  Periodic internal audits

Question 3

Which of the following represents a typical substantive audit procedure for cash balances?

Accepted Answer

A)  Verify material deposits-in-transit to subsequent statements. 
B)  Review cash confirms received by the client from the bank. 
C)  Foot cutoff bank statements provided by the financial institutions. 
D)  Perform kiting techniques to transfer cash between two client accounts. 
A)  Verify material deposits-in-transit to subsequent statements. 
B)  Review cash confirms received by the client from the bank. 
C)  Foot cutoff bank statements provided by the financial institutions. 
D)  Perform kiting techniques to transfer cash between two client accounts.

Question 4

Gains and losses are not considered in audit testing, as they do not need to be disclosed.

Accepted Answer

A) True 
 B)False

Question 5

When testing cash balances at the balance sheet date, the auditor foots the bank reconciliation and traces its reported book balance to the trial balance and its bank balance to the standard confirmation. Which of the following assertions is being tested with these procedures?

Accepted Answer

A)  Rights. 
B)  Valuation. 
C)  Existence. 
D)  All of the above. 
A)  Rights. 
B)  Valuation. 
C)  Existence. 
D)  All of the above.

Question 6

The ending price of securities can be verified through reliable publications and websites such as the Wall Street Journal.

Accepted Answer

A) True 
 B)False

Question 7

The risk of the company issuing checks near year-end and mailing them subsequently is not important to the auditor because the action does not affect cash balances.

Accepted Answer

A) True 
 B)False

Question 8

Auditing marketable securities - assertions.
Identify at least eight sources of evidence and testing the auditor may use in the audit of marketable securities by major assertion tested.

Accepted Answer

The auditor may use the follow

Question 9

Which of the following describes documents that accompany customer payments to help the clerk identify the payments?

Accepted Answer

A)  Receipts such as register tapes. 
B)  Accommodation certificates such as authenticated customer tokens. 
C)  Turnaround documents such as remittance advices. 
D)  Checks stamped with restrictive endorsements such as customer signatures. 
A)  Receipts such as register tapes. 
B)  Accommodation certificates such as authenticated customer tokens. 
C)  Turnaround documents such as remittance advices. 
D)  Checks stamped with restrictive endorsements such as customer signatures.

Question 10

Which of the following is not a reason for a client to employ cash management techniques?

Accepted Answer

A)  Speed the collection and deposit of cash. 
B)  Reduce the effect of compensating balances. 
C)  Reduce the amount of paperwork. 
D)  Automate the cash management process. 
A)  Speed the collection and deposit of cash. 
B)  Reduce the effect of compensating balances. 
C)  Reduce the amount of paperwork. 
D)  Automate the cash management process.

Question 11

A compensating balance arrangement usually results in which of the following for a company?

Accepted Answer

A)  Increase its interest income. 
B)  Increase the effective interest rate on corporate borrowing. 
C)  Decrease the effective interest rate on corporate borrowing. 
D)  Exhibit no change in the effective interest rate on corporate borrowing. 
A)  Increase its interest income. 
B)  Increase the effective interest rate on corporate borrowing. 
C)  Decrease the effective interest rate on corporate borrowing. 
D)  Exhibit no change in the effective interest rate on corporate borrowing.

Question 12

Which of the following would the auditor use to determine the existence of investments?

Accepted Answer

A)  Footing the schedule of recorded investments. 
B)  Confirming or examining recorded investments. 
C)  A schedule of investments sold during the year. 
D)  Recomputing interest and/or gains and losses. 
A)  Footing the schedule of recorded investments. 
B)  Confirming or examining recorded investments. 
C)  A schedule of investments sold during the year. 
D)  Recomputing interest and/or gains and losses.

Question 13

Auditing marketable securities
List the common substantive procedures used to address the risks relating to fraud in investments:

Accepted Answer

• Employment of a specialist to assist i

Question 14

The cash account is significant to the auditor for which of the following reasons?

Accepted Answer

A)  The cash account is the culmination of a large volume of transactions. 
B)  The cash account is not as susceptible to fraud as most other accounts. 
C)  Cash is the only account that provides opportunity for fraud. 
D)  Automated systems do not possess the capability to maintain strong internal controls over cash. 
A)  The cash account is the culmination of a large volume of transactions. 
B)  The cash account is not as susceptible to fraud as most other accounts. 
C)  Cash is the only account that provides opportunity for fraud. 
D)  Automated systems do not possess the capability to maintain strong internal controls over cash.

Question 15

The ease with which cash can be stolen is most related to which of the following risks?

Accepted Answer

A)  Control risk. 
B)  Inherent risk. 
C)  Detection risk. 
D)  Liquidity risk. 
A)  Control risk. 
B)  Inherent risk. 
C)  Detection risk. 
D)  Liquidity risk.

Question 16

Which of the following is not a normal edit test as part of computerized control for checks?

Accepted Answer

A)  Field checks. 
B)  Self-checking digits. 
C)  Cross-references. 
D)  Reasonableness tests. 
A)  Field checks. 
B)  Self-checking digits. 
C)  Cross-references. 
D)  Reasonableness tests.

Question 17

The auditor may discover evidence of lapping by preparing an interbank transfer schedule.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is required by accounting standards for the presentation and disclosure of investments in marketable securities?

Accepted Answer

A)  By classification as trading, available-for-sale or held-to maturity. 
B)  For an analyst's determination of liquidity. 
C)  For the company's physical possession of the security versus agent holdings. 
D)  For the expected success of the organization of investment. 
A)  By classification as trading, available-for-sale or held-to maturity. 
B)  For an analyst's determination of liquidity. 
C)  For the company's physical possession of the security versus agent holdings. 
D)  For the expected success of the organization of investment.

Question 19

Which of the following is the most relevant assertion with regards to the audit of cash?

Accepted Answer

A)  Existence 
B)  Rights and obligations. 
C)  Valuation and allocation. 
D)  Presentation and disclosure. 
A)  Existence 
B)  Rights and obligations. 
C)  Valuation and allocation. 
D)  Presentation and disclosure.

Question 20

What form of evidence is used by the auditor to verify bank reconciliation items?

Accepted Answer

A)  Cash counting observation. 
B)  General ledger. 
C)  Bank confirmation 
D)  Cutoff statement. 
A)  Cash counting observation. 
B)  General ledger. 
C)  Bank confirmation 
D)  Cutoff statement.

When auditing marketable securities, the auditor will do which of the following?

Which one of the following is not a fundamental internal control the auditor would expect to find in place for a cash processing system?

Which of the following represents a typical substantive audit procedure for cash balances?

Gains and losses are not considered in audit testing, as they do not need to be disclosed.

When testing cash balances at the balance sheet date, the auditor foots the bank reconciliation and traces its reported book balance to the trial balance and its bank balance to the standard confirmation. Which of the following assertions is being tested with these procedures?

The ending price of securities can be verified through reliable publications and websites such as the Wall Street Journal.

The risk of the company issuing checks near year-end and mailing them subsequently is not important to the auditor because the action does not affect cash balances.

Auditing marketable securities - assertions. Identify at least eight sources of evidence and testing the auditor may use in the audit of marketable securities by major assertion tested.

Which of the following describes documents that accompany customer payments to help the clerk identify the payments?

Which of the following is not a reason for a client to employ cash management techniques?

A compensating balance arrangement usually results in which of the following for a company?

Which of the following would the auditor use to determine the existence of investments?

Auditing marketable securities List the common substantive procedures used to address the risks relating to fraud in investments:

The cash account is significant to the auditor for which of the following reasons?

The ease with which cash can be stolen is most related to which of the following risks?

Which of the following is not a normal edit test as part of computerized control for checks?

The auditor may discover evidence of lapping by preparing an interbank transfer schedule.

Which of the following is required by accounting standards for the presentation and disclosure of investments in marketable securities?

Which of the following is the most relevant assertion with regards to the audit of cash?

What form of evidence is used by the auditor to verify bank reconciliation items?

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

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Exam 10: Auditing Cash and Marketable Securities

When auditing marketable securities, the auditor will do which of the following?

Which one of the following is not a fundamental internal control the auditor would expect to find in place for a cash processing system?

Which of the following represents a typical substantive audit procedure for cash balances?

Gains and losses are not considered in audit testing, as they do not need to be disclosed.

When testing cash balances at the balance sheet date, the auditor foots the bank reconciliation and traces its reported book balance to the trial balance and its bank balance to the standard confirmation. Which of the following assertions is being tested with these procedures?

The ending price of securities can be verified through reliable publications and websites such as the Wall Street Journal.

The risk of the company issuing checks near year-end and mailing them subsequently is not important to the auditor because the action does not affect cash balances.

Auditing marketable securities - assertions. Identify at least eight sources of evidence and testing the auditor may use in the audit of marketable securities by major assertion tested.

Which of the following describes documents that accompany customer payments to help the clerk identify the payments?

Which of the following is not a reason for a client to employ cash management techniques?

A compensating balance arrangement usually results in which of the following for a company?

Which of the following would the auditor use to determine the existence of investments?

Auditing marketable securities List the common substantive procedures used to address the risks relating to fraud in investments:

The cash account is significant to the auditor for which of the following reasons?

The ease with which cash can be stolen is most related to which of the following risks?

Which of the following is not a normal edit test as part of computerized control for checks?

The auditor may discover evidence of lapping by preparing an interbank transfer schedule.

Which of the following is required by accounting standards for the presentation and disclosure of investments in marketable securities?

Which of the following is the most relevant assertion with regards to the audit of cash?

What form of evidence is used by the auditor to verify bank reconciliation items?

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