Question 1

Explain what is meant by a cutoff bank statement,and discuss the purpose of the cutoff bank statement in the audit of cash.

Accepted Answer

A cutoff bank statement is a partial-per

Question 2

The bank reconciliation control is enhanced when a qualified employee reviews the monthly reconciliation as soon as possible after its completion.

Accepted Answer

A) True 
 B)False

Question 3

A proof of cash helps the auditor determine whether all recorded cash receipts were deposited in the bank and whether all recorded cash disbursements were paid by the bank.

Accepted Answer

A) True 
 B)False

Question 4

A statement near the bottom of the standard bank confirmation form requires the bank to inform auditors of open lines of credit and compensating balance requirements.

Accepted Answer

A) True 
 B)False

Question 5

A proof of cash includes four reconciliation tasks.List below two of those tasks.

Accepted Answer

1. Reconcile the balance on the bank sta

Question 6

Which of the following verifications would generally not be performed by the auditor in the month subsequent to the balance sheet date?

Accepted Answer

A) Foot the lists of all canceled checks,debit memos,deposits,and credit memos. 
B) Verify the bank statement balances when the footed totals are used. 
C) Verify the book statement balances tie to the cash receipts and disbursements journals for the year under audit. 
D) Review the items included in the footings to make sure that they were cancelled by the bank. 
A) Foot the lists of all canceled checks,debit memos,deposits,and credit memos. 
B) Verify the bank statement balances when the footed totals are used. 
C) Verify the book statement balances tie to the cash receipts and disbursements journals for the year under audit. 
D) Review the items included in the footings to make sure that they were cancelled by the bank.

Question 7

When the auditor believes the year-end bank reconciliation may be intentionally misstated,it is appropriate to perform extended tests of the year-end bank reconciliation.Assuming the client has a October 31 year-end,these extended tests would not include

Accepted Answer

A) comparing all September 30 reconciling items with canceled checks and other documents in the October bank statement. 
B) comparing all canceled checks and deposit slips in the October bank statement with the October cash disbursements and receipts records. 
C) carrying out all proper procedures subsequent to the end of the year with the use of the bank cutoff statement. 
D) determining that all outstanding checks had cleared by the date of the bank cutoff statement. 
A) comparing all September 30 reconciling items with canceled checks and other documents in the October bank statement. 
B) comparing all canceled checks and deposit slips in the October bank statement with the October cash disbursements and receipts records. 
C) carrying out all proper procedures subsequent to the end of the year with the use of the bank cutoff statement. 
D) determining that all outstanding checks had cleared by the date of the bank cutoff statement.

Question 8

Which of the following cycles does not affect cash in bank?

Accepted Answer

A) capital acquisitions cycle 
B) inventory and warehousing 
C) payroll and personnel cycle 
D) acquisitions and disbursements 
A) capital acquisitions cycle 
B) inventory and warehousing 
C) payroll and personnel cycle 
D) acquisitions and disbursements

Question 9

An imprest petty cash fund would least likely be used to pay for which of the following items?

Accepted Answer

A) minor office supplies 
B) monthly interest expense 
C) stamps for small mailings 
D) small contributions to a local charity 
A) minor office supplies 
B) monthly interest expense 
C) stamps for small mailings 
D) small contributions to a local charity

Question 10

Explain the purpose of testing the client's bank reconciliation,and discuss the major audit procedures involved.

Accepted Answer

Auditors test the bank reconciliation to

Question 11

Match between columns
                        Premises: a fund of cash maintained within the company for small cash acquisitions,expenses,or to cash employees' checks
the primary bank account for most organizations
excess cash invested in short-term,highly liquid investments such as time deposits,certificates of deposit,and money market funds
a form approved by the AICPA and American Bankers' Association through which the bank responds to the auditor about bank balance and loan information
the transfer of money from one bank account to another and improperly recording the transfer so that the amount is recorded as an asset in both accounts
the document usually prepared by client personnel of the differences between the cash balance recorded in the general ledger and the amount in the bank account

Accepted Answer

The Answer of cutoff bank statement and imprest petty cash is...

Question 12

Which of the following is a correct statement?

Accepted Answer

A) The proof of cash receipts is a test of the balance in the cash account at a point in time. 
B) The proof of cash disbursements is effective for discovering a check written for the incorrect amount for which the dollar amount in cash disbursements is also incorrect. 
C) It is extremely difficult for an auditor to detect thefts of cash,especially omitted transactions and account balances. 
D) Segregation of duties is not an important control procedure for cash in a small business. 
A) The proof of cash receipts is a test of the balance in the cash account at a point in time. 
B) The proof of cash disbursements is effective for discovering a check written for the incorrect amount for which the dollar amount in cash disbursements is also incorrect. 
C) It is extremely difficult for an auditor to detect thefts of cash,especially omitted transactions and account balances. 
D) Segregation of duties is not an important control procedure for cash in a small business.

Question 13

The audit and accounting concern addressed in a monthly proof of cash is with

Accepted Answer

A) adjusting account balances. 
B) reconciling the amounts recorded in the books with the amounts included in the bank statement. 
C) determining the month-end balance. 
D) identifying cash transfers. 
A) adjusting account balances. 
B) reconciling the amounts recorded in the books with the amounts included in the bank statement. 
C) determining the month-end balance. 
D) identifying cash transfers.

Question 14

The auditor must extend the audit procedures in the audit of year-end cash when there are inadequate internal controls.

Accepted Answer

A) True 
 B)False

Question 15

The starting point for the verification of the balance in the general bank account is to obtain a bank cut-off statement.

Accepted Answer

A) True 
 B)False

Question 16

Completeness is an important objective for derivative financial instruments.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following balance-related objectives applies to auditing the general cash account?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 18

List at least three misstatements that are designed to be detected by a bank reconciliation.

Accepted Answer

1. Failure to include a check that has n

Question 19

When auditing financial instruments,the most difficult objective to test is existence.

Accepted Answer

A) True 
 B)False

Question 20

Securities and contracts will typically be held by the broker-dealer.

Accepted Answer

A) True 
 B)False

Exam 23: Audit of Cash and Financial Instruments

Explain what is meant by a cutoff bank statement,and discuss the purpose of the cutoff bank statement in the audit of cash.

The bank reconciliation control is enhanced when a qualified employee reviews the monthly reconciliation as soon as possible after its completion.

A proof of cash helps the auditor determine whether all recorded cash receipts were deposited in the bank and whether all recorded cash disbursements were paid by the bank.

A statement near the bottom of the standard bank confirmation form requires the bank to inform auditors of open lines of credit and compensating balance requirements.

A proof of cash includes four reconciliation tasks.List below two of those tasks.

Which of the following verifications would generally not be performed by the auditor in the month subsequent to the balance sheet date?

When the auditor believes the year-end bank reconciliation may be intentionally misstated,it is appropriate to perform extended tests of the year-end bank reconciliation.Assuming the client has a October 31 year-end,these extended tests would not include

Which of the following cycles does not affect cash in bank?

An imprest petty cash fund would least likely be used to pay for which of the following items?

Explain the purpose of testing the client's bank reconciliation,and discuss the major audit procedures involved.

Which of the following is a correct statement?

The audit and accounting concern addressed in a monthly proof of cash is with

The auditor must extend the audit procedures in the audit of year-end cash when there are inadequate internal controls.

The starting point for the verification of the balance in the general bank account is to obtain a bank cut-off statement.

Completeness is an important objective for derivative financial instruments.

Which of the following balance-related objectives applies to auditing the general cash account?

List at least three misstatements that are designed to be detected by a bank reconciliation.

When auditing financial instruments,the most difficult objective to test is existence.

Securities and contracts will typically be held by the broker-dealer.

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Fraud Auditing

Internal Control and Coso Framework

Assessing Control Risk and Reporting on Internal Controls

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls,

Completing the Tests in the Acquisition and Payment Cycle:

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of the Capital Acquisition and Repayment Cycle

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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