Exam 10: Cash and Financial Investments

In a manufacturing company which one of the following audit procedures would give the least assurance of the existence of the assets in the general ledger balance of investment in stocks and bonds at the audit date?

Which of the following manipulations of cash transactions would overstate the cash balance on the financial statements?

Which of the following procedures in the cash disbursements cycle should not be performed by the accounts payable department?

To gather evidence regarding the balance per bank in a bank reconciliation,an auditor could examine all of the following except:

Control over the receipt of cash sales is best achieved when two or more employees participate in each transaction.

Confirmations for cash balances should be mailed only to the financial institutions with which the client has a cash balance at year-end.

Which of the following is not a control that generally is established over cash receipts?

In many financial statements audits,auditing financial investments involves complex tasks requiring specialized skill and knowledge. a.List three audit tasks related to the audit of financial investments that may require specialized skill or knowledge. b.Define the term "financial derivative." c.List the two general purposes that a client might acquire a financial derivative.

A proof of cash is an audit procedure that is performed on almost every engagement.

On receiving the bank cutoff statement,the auditor should trace:

The Standard Form to Confirm Account Balances with Financial Institutions includes information on all of the following except:

Internal control over marketable securities is enhanced when:

The Parmalat fraud case involved:

By preparing a four-column bank reconciliation ("proof of cash")at year-end,an auditor will generally be able to detect:

An auditor may obtain information on the December 31 month-end balance per bank in which of the following? December 31 Bank Statement Schedule of Bank (Cash) Transfers A) Yes Yes B) Yes No C) No Yes D) No No

Which of the following is not a control that generally is established over cash transactions?

Your client left the cash receipts journal open after year-end for an extra day and included January 1 cash receipts in the 12/31/XX totals.All of those cash receipts were due to cash sales.Assuming the client uses a periodic inventory system with a 12/31/XX count of the physical inventory,which of the following is most likely to be true relating to the year XX financial statements?

Tracing recorded sales transactions in the sales journal to the shipping documents (bills of lading)provides evidence about the:

In the audit of a client's financial statements,the auditors must be concerned with the possibility that client personnel might be engaged in kiting or lapping. a.Define lapping and describe an audit procedure that might detect lapping. b.Define kiting and describe an audit procedure that might detect kiting.

Since financial investments are assets with a high degree of inherent risk,companies must establish effective internal control over their investments. a.Describe the functions that should be segregated to provide good internal control over financial investments. b.Describe two other internal control policies that should be established for financial investments.