Question 1

Which of the following is correct concerning "window dressing" for cash?

Accepted Answer

A) A segregation of duties within the cash function effectively eliminates its occurrence. 
B) It generally involves manipulation of inventory. 
C) It is illegal, and an audit is designed to provide reasonable assurance of its detection. 
D) Many forms of it require no action by the auditors. 
A) A segregation of duties within the cash function effectively eliminates its occurrence. 
B) It generally involves manipulation of inventory. 
C) It is illegal, and an audit is designed to provide reasonable assurance of its detection. 
D) Many forms of it require no action by the auditors.

Question 2

Jones was engaged to audit the financial statements of Gamma Corporation for the year ended June 30,200X.Having completed an examination of the investment securities,which of the following is the best method of verifying the accuracy of recorded dividend income?

Accepted Answer

A) Tracing recorded dividend income to cash receipts records and validated deposit slips. 
B) Utilizing analytical techniques and statistical sampling. 
C) Comparing recorded dividends with amounts appearing on federal information form 1099s. 
D) Comparing recorded dividends with a standard financial reporting service's record of dividends. 
A) Tracing recorded dividend income to cash receipts records and validated deposit slips. 
B) Utilizing analytical techniques and statistical sampling. 
C) Comparing recorded dividends with amounts appearing on federal information form 1099s. 
D) Comparing recorded dividends with a standard financial reporting service's record of dividends.

Question 3

Contact with banks for the purpose of opening company bank accounts should normally be the responsibility of the corporate:

Accepted Answer

A) Board of Directors. 
B) Treasurer. 
C) Controller. 
D) Executive Committee. 
A) Board of Directors. 
B) Treasurer. 
C) Controller. 
D) Executive Committee.

Question 4

Which one of the following would the auditor consider to be an incompatible operation if the cashier receives remittances from the mailroom?

Accepted Answer

A) The cashier prepares the daily deposit. 
B) The cashier makes the daily deposit at a local bank. 
C) The cashier posts the receipts to the accounts receivable subsidiary ledger. 
D) The cashier endorses the checks. 
A) The cashier prepares the daily deposit. 
B) The cashier makes the daily deposit at a local bank. 
C) The cashier posts the receipts to the accounts receivable subsidiary ledger. 
D) The cashier endorses the checks.

Question 5

As one of the year-end audit procedures,the auditor instructed the client's personnel to prepare a confirmation request for a bank account that had been closed during the year.After the client's treasurer has signed the request,it was mailed by the assistant treasurer.What is the major flaw in this audit procedure?

Accepted Answer

A) The confirmation request was signed by the treasurer. 
B) Sending the request was meaningless because the account was closed before the year end. 
C) The request was mailed by the assistant treasurer. 
D) The CPA did not sign the confirmation request before it was mailed. 
A) The confirmation request was signed by the treasurer. 
B) Sending the request was meaningless because the account was closed before the year end. 
C) The request was mailed by the assistant treasurer. 
D) The CPA did not sign the confirmation request before it was mailed.

Question 6

Which of the following is correct relating to kiting?

Accepted Answer

A) It is ordinarily used to understate cash. 
B) It is more difficult to accomplish in an electronic environment as contrasted to a non-electronic environment. 
C) It is a lapping approach performed using receivable accounts. 
D) It is seldom, if ever, used. 
A) It is ordinarily used to understate cash. 
B) It is more difficult to accomplish in an electronic environment as contrasted to a non-electronic environment. 
C) It is a lapping approach performed using receivable accounts. 
D) It is seldom, if ever, used.

Question 7

In October,three months before year-end,the bookkeeper erroneously recorded the receipt of a one year bank loan with a debit to cash and a credit to miscellaneous revenue.Select the most effective method for detecting this type of error.

Accepted Answer

A) Foot the cash receipts journal for October. 
B) Send a bank confirmation as of year-end. 
C) Prepare a bank reconciliation as of year-end. 
D) Prepare a bank transfer schedule as of year-end. 
A) Foot the cash receipts journal for October. 
B) Send a bank confirmation as of year-end. 
C) Prepare a bank reconciliation as of year-end. 
D) Prepare a bank transfer schedule as of year-end.

Question 8

The auditors' count of the client's cash should be coordinated to coincide with the:

Accepted Answer

A) Consideration of the internal controls with respect to cash. 
B) Close of business on the balance sheet date. 
C) Count of investment securities. 
D) Count of inventories. 
A) Consideration of the internal controls with respect to cash. 
B) Close of business on the balance sheet date. 
C) Count of investment securities. 
D) Count of inventories.

Question 9

Signed checks should be returned to the cash disbursements clerk for mailing.

Accepted Answer

A) True 
 B)False

Question 10

The auditors should insist that a representative of the client be present during the physical examination of securities in order to:

Accepted Answer

A) Lend authority of the auditor's directives. 
B) Detect forged securities. 
C) Coordinate the return of all securities to proper locations. 
D) Acknowledge the receipt of securities returned. 
A) Lend authority of the auditor's directives. 
B) Detect forged securities. 
C) Coordinate the return of all securities to proper locations. 
D) Acknowledge the receipt of securities returned.

Question 11

An auditor may obtain information on the December 31 month-end balance per bank in which of the following? $$\begin{array} { c } 
&\text { Standard Confirmation Form}&& \text{January 1-10 Cutoff Statement }\
\text { A) } & \text { Yes } && \text { Yes } \
\text { B) } & \text { Yes } && \text { No } \
\text { C) } & \text { No } && \text { Yes } \
\text { D) } & \text { No } && \text { No }
\end{array}$$

Accepted Answer

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

Question 12

Properly designed internal control will permit the same employee to:

Accepted Answer

A) Receive and deposit checks, and also approve write-offs of customer accounts. 
B) Approve vouchers for payment, and also receive and deposit cash. 
C) Reconcile the bank statements, and also receive and deposit cash. 
D) Sign checks, and also cancel supporting documents. 
A) Receive and deposit checks, and also approve write-offs of customer accounts. 
B) Approve vouchers for payment, and also receive and deposit cash. 
C) Reconcile the bank statements, and also receive and deposit cash. 
D) Sign checks, and also cancel supporting documents.

Question 13

You are working on the Bemco audit.Assume that the questions below are unrelated.Bill Wedman,another staff member,has given you the following list of what he refers to as "internal control deficiencies" and has asked you to review each point and make sure that you agree that each is an internal control deficiency.

Accepted Answer

1.Agree.Voided checks should be so marke

Question 14

Which of the following is not a universal rule for achieving internal control over cash?

Accepted Answer

A) Separate recordkeeping from accounting for cash to the extent possible. 
B) Deposit each day's cash receipts intact. 
C) Separate cash handling from recordkeeping. 
D) Have monthly bank reconciliations prepared by employees not responsible for the issuance of checks. 
A) Separate recordkeeping from accounting for cash to the extent possible. 
B) Deposit each day's cash receipts intact. 
C) Separate cash handling from recordkeeping. 
D) Have monthly bank reconciliations prepared by employees not responsible for the issuance of checks.

Question 15

A company's decision to use the fair value option for valuation of marketable securities is most likely to affects which of the following assertions the most?

Accepted Answer

A) Completeness. 
B) Existence. 
C) Fairness. 
D) Presentation and Disclosure. 
A) Completeness. 
B) Existence. 
C) Fairness. 
D) Presentation and Disclosure.

Question 16

Which of the following is the best audit procedure for the detection of lapping?

Accepted Answer

A) Comparison of postings of cash receipts to accounts with the details of cash deposits. 
B) Confirmation of the cash balance. 
C) Reconciliation of the cash account balances. 
D) Preparing a proof of cash. 
A) Comparison of postings of cash receipts to accounts with the details of cash deposits. 
B) Confirmation of the cash balance. 
C) Reconciliation of the cash account balances. 
D) Preparing a proof of cash.

Question 17

A practical and effective audit procedure for the detection of lapping is:

Accepted Answer

A) Preparing an interbank transfer schedule. 
B) Comparing recorded cash receipts in detail against items making up the bank deposit as shown on duplicate deposit slips validated by the bank. 
C) Tracing recorded cash receipts to postings in customers' ledger cards. 
D) Preparing a proof of cash. 
A) Preparing an interbank transfer schedule. 
B) Comparing recorded cash receipts in detail against items making up the bank deposit as shown on duplicate deposit slips validated by the bank. 
C) Tracing recorded cash receipts to postings in customers' ledger cards. 
D) Preparing a proof of cash.

Question 18

An internal control questionnaire indicates that an approved receiving report is required to accompany every check request for payment of merchandise.Which of the following procedures provides the best evidence on operating effectiveness?

Accepted Answer

A) Select and examine receiving reports and test whether the related canceled checks are dated no earlier than the receiving reports. 
B) Select and examine receiving reports and test whether the related canceled checks are dated no later than the receiving reports. 
C) Select and examine canceled checks and test whether the related receiving reports are dated no earlier than the checks. 
D) Select and examine canceled checks and test whether the related receiving reports are dated no later than the checks. 
A) Select and examine receiving reports and test whether the related canceled checks are dated no earlier than the receiving reports. 
B) Select and examine receiving reports and test whether the related canceled checks are dated no later than the receiving reports. 
C) Select and examine canceled checks and test whether the related receiving reports are dated no earlier than the checks. 
D) Select and examine canceled checks and test whether the related receiving reports are dated no later than the checks.

Question 19

Listed below are four interbank cash transfers,indicated by the letters a,b,c and d,of a client for late December 20X1,and early January 20X2.Your answer choice for the next two questions should be selected from this list.

Accepted Answer

@#IMG-DLM& For each of transfers a through d indic

Question 20

Banks may process electronic "substitute checks" in place of customer written hard copy checks due to the:

Accepted Answer

A) Check Clearing for the 21st Century Act. 
B) Public Company Accounting Oversight Board's Standard No.2. 
C) Foreign Corrupt Practices Act. 
D) Sarbanes-Oxley Act. 
A) Check Clearing for the 21st Century Act. 
B) Public Company Accounting Oversight Board's Standard No.2. 
C) Foreign Corrupt Practices Act. 
D) Sarbanes-Oxley Act.

Which of the following is correct concerning "window dressing" for cash?

Jones was engaged to audit the financial statements of Gamma Corporation for the year ended June 30,200X.Having completed an examination of the investment securities,which of the following is the best method of verifying the accuracy of recorded dividend income?

Contact with banks for the purpose of opening company bank accounts should normally be the responsibility of the corporate:

Which one of the following would the auditor consider to be an incompatible operation if the cashier receives remittances from the mailroom?

Which of the following is correct relating to kiting?

In October,three months before year-end,the bookkeeper erroneously recorded the receipt of a one year bank loan with a debit to cash and a credit to miscellaneous revenue.Select the most effective method for detecting this type of error.

The auditors' count of the client's cash should be coordinated to coincide with the:

Signed checks should be returned to the cash disbursements clerk for mailing.

The auditors should insist that a representative of the client be present during the physical examination of securities in order to:

An auditor may obtain information on the December 31 month-end balance per bank in which of the following? Standard Confirmation Form January 1-10 Cutoff Statement A) Yes Yes B) Yes No C) No Yes D) No No

Properly designed internal control will permit the same employee to:

Which of the following is not a universal rule for achieving internal control over cash?

A company's decision to use the fair value option for valuation of marketable securities is most likely to affects which of the following assertions the most?

Which of the following is the best audit procedure for the detection of lapping?

A practical and effective audit procedure for the detection of lapping is:

An internal control questionnaire indicates that an approved receiving report is required to accompany every check request for payment of merchandise.Which of the following procedures provides the best evidence on operating effectiveness?

Listed below are four interbank cash transfers,indicated by the letters a,b,c and d,of a client for late December 20X1,and early January 20X2.Your answer choice for the next two questions should be selected from this list.

Banks may process electronic "substitute checks" in place of customer written hard copy checks due to the:

The Role of the Public Accountant in the American Economy

Professional Standards

Professional Ethics

Legal Liability of CPAS

Audit Evidence and Documentation

Audit Planning, understanding the Client, assessing Risks, and Responding

Internal Control

Consideration of Internal Control in an Information Technology Environment

Audit Sampling

Accounts Receivable, Notes Receivable, and Revenue

Inventories and Cost of Goods Sold

Property Plant and Equipment: Depreciation and Depletion

Accounts Payable and Other Liabilities

Debt and Equity Capital

Auditing Operations and Completing the Audit

Auditors Report

Integrated Audits of Public Companies

Additional Assurance Services: Historical Financial Information

Additional Assurance Services: Other Information

Internal, Operational, and Compliance Auditing

Probability-Proportion-To-Size Sampling

Filters

Exam 10: Cash and Financial Investments

Which of the following is correct concerning "window dressing" for cash?

Jones was engaged to audit the financial statements of Gamma Corporation for the year ended June 30,200X.Having completed an examination of the investment securities,which of the following is the best method of verifying the accuracy of recorded dividend income?

Contact with banks for the purpose of opening company bank accounts should normally be the responsibility of the corporate:

Which one of the following would the auditor consider to be an incompatible operation if the cashier receives remittances from the mailroom?

Which of the following is correct relating to kiting?

In October,three months before year-end,the bookkeeper erroneously recorded the receipt of a one year bank loan with a debit to cash and a credit to miscellaneous revenue.Select the most effective method for detecting this type of error.

The auditors' count of the client's cash should be coordinated to coincide with the:

Signed checks should be returned to the cash disbursements clerk for mailing.

The auditors should insist that a representative of the client be present during the physical examination of securities in order to:

An auditor may obtain information on the December 31 month-end balance per bank in which of the following? Standard Confirmation Form January 1-10 Cutoff Statement A) Yes Yes B) Yes No C) No Yes D) No No

Properly designed internal control will permit the same employee to:

Which of the following is not a universal rule for achieving internal control over cash?

A company's decision to use the fair value option for valuation of marketable securities is most likely to affects which of the following assertions the most?

Which of the following is the best audit procedure for the detection of lapping?

A practical and effective audit procedure for the detection of lapping is:

An internal control questionnaire indicates that an approved receiving report is required to accompany every check request for payment of merchandise.Which of the following procedures provides the best evidence on operating effectiveness?

Listed below are four interbank cash transfers,indicated by the letters a,b,c and d,of a client for late December 20X1,and early January 20X2.Your answer choice for the next two questions should be selected from this list.

Banks may process electronic "substitute checks" in place of customer written hard copy checks due to the:

The Role of the Public Accountant in the American Economy

Professional Standards

Professional Ethics

Legal Liability of CPAS

Audit Evidence and Documentation

Audit Planning, understanding the Client, assessing Risks, and Responding

Internal Control

Consideration of Internal Control in an Information Technology Environment

Audit Sampling

Accounts Receivable, Notes Receivable, and Revenue

Inventories and Cost of Goods Sold

Property Plant and Equipment: Depreciation and Depletion

Accounts Payable and Other Liabilities

Debt and Equity Capital

Auditing Operations and Completing the Audit

Auditors Report

Integrated Audits of Public Companies

Additional Assurance Services: Historical Financial Information

Additional Assurance Services: Other Information

Internal, Operational, and Compliance Auditing

Probability-Proportion-To-Size Sampling

Filters