Exam 23: Audit of Cash and Financial Instruments

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 banks is referred to as kiting.

The following information applies to the questions below: Listed below are four interbank cash transfers, indicated by the numbers 1, 2, 3, and 4, of a client for late December 2013 and early January 2014: -Based on the schedule of interbank transfers above,which of the cash transfers would not appear as an outstanding check on the December 31,2013 bank reconciliation?

The auditor uses a proof of cash to determine whether:

What should be audited on an interbank transfer schedule?

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

The direct receipt of a confirmation from every bank with which the client does business is:

A major consideration in the audit of the general cash balance is the possibility of fraud.The auditor must extend his or her procedures in the audit of year-end cash to determine the possibility of a material fraud when there are:

The most important objectives for financial instruments are existence and consistency.

Instead of receiving a cutoff bank statement,auditors can wait until the subsequent period bank statement is available to verify reconciling items.Discuss the purpose of reviewing the subsequent period bank statement and list the verifications the auditor performs on this bank statement.

Which is not an important objective for financial instruments?

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

Factors that impact inherent risk of financial instruments do not include:

All of the following are correct statements regarding business risk and financial instruments except for:

As part of their internal control procedures,management needs to have procedures in place to properly classify financial instruments as trading,available-for-sale,or held-to-maturity,based on:

Companies may purchase marketable securities as a way to temporarily invest excess cash.

Determining if the financial instruments included in the schedule of investment activity at year end are stated at appropriate amounts in accordance with accounting standards is the balance-related audit objective of:

Which of the following is not a "cash equivalent"?

A proof of cash is not an effective procedure for identifying which of the following types of misstatements?

Which of the following would normally be discovered as part of the audit of the bank reconciliation?

When an auditor is verifying quoted market prices,they are concerned about the balance-related audit objective of accuracy.