Question 1

All of the following can assist the auditor in testing the existence assertion for investment securities except:

Accepted Answer

A)  Physical examination. 
B)  Comparing fair value to cost. 
C)  Confirmation with the issuer. 
D)  Confirmation with the custodian. 
A)  Physical examination. 
B)  Comparing fair value to cost. 
C)  Confirmation with the issuer. 
D)  Confirmation with the custodian.

Question 2

If fraud is suspected,auditors may complete all of the following procedures except:

Accepted Answer

A)  Testing for kiting. 
B)  Footing the bank reconciliation and the outstanding checks listing. 
C)  Performing a proof of cash. 
D)  Performing extended bank reconciliation procedures, including detailed examination of reconciling items. 
A)  Testing for kiting. 
B)  Footing the bank reconciliation and the outstanding checks listing. 
C)  Performing a proof of cash. 
D)  Performing extended bank reconciliation procedures, including detailed examination of reconciling items.

Question 3

An auditor should trace interbank transfers for the last part of the audit period and first part of the subsequent period to detect whether

Accepted Answer

A)  The cash receipts journal was held open for a few days after the year-end. 
B)  The last checks recorded before the year end were actually mailed by the year-end. 
C)  Cash balances were overstated because of kiting. 
D)  Any unusual payments to or receipts from related parties occurred. 
A)  The cash receipts journal was held open for a few days after the year-end. 
B)  The last checks recorded before the year end were actually mailed by the year-end. 
C)  Cash balances were overstated because of kiting. 
D)  Any unusual payments to or receipts from related parties occurred.

Question 4

For each assertion about cash listed below,give an example of a test of transactions for (1)cash receipts and (2)cash disbursements.
a.Classification.
b.Occurrence.
c.Authorization.
d.Completeness.

Accepted Answer

Student answers will vary:
a.1.Cash rece

Question 5

Which of the following control activities would an entity most likely use to assist in satisfying the completeness assertion related to long-term investments?

Accepted Answer

A)  Senior management verifies that securities in the bank safe-deposit box are registered in the entity's name. 
B)  The internal auditor compares the securities in the bank safe-deposit box with recorded investments. 
C)  The treasurer vouches the acquisition of securities by comparing brokers' advices with canceled checks. 
D)  The controller compares the current market prices of recorded investments with the brokers' advices on file. 
A)  Senior management verifies that securities in the bank safe-deposit box are registered in the entity's name. 
B)  The internal auditor compares the securities in the bank safe-deposit box with recorded investments. 
C)  The treasurer vouches the acquisition of securities by comparing brokers' advices with canceled checks. 
D)  The controller compares the current market prices of recorded investments with the brokers' advices on file.

Question 6

Of the following,which is the most efficient audit procedure for verification of interest earned on bond investments?

Accepted Answer

A)  Tracing interest declarations to an independent record book. 
B)  Recomputing interest earned using the interest rate and bond amount. 
C)  Confirming the interest rate with the issuer of the bonds. 
D)  Vouching the receipt and deposit of interest checks. 
A)  Tracing interest declarations to an independent record book. 
B)  Recomputing interest earned using the interest rate and bond amount. 
C)  Confirming the interest rate with the issuer of the bonds. 
D)  Vouching the receipt and deposit of interest checks.

Question 7

The cashier of Brooke Company covered a shortage in the cash working fund with cash obtained on December 31 from a local bank by cashing,but not recording,a check drawn on the company's out-of-town bank.How would the auditor discover this manipulation?

Accepted Answer

A)  Confirming all December 31 bank balances. 
B)  Counting the cash working fund at the close of business on December 31. 
C)  Preparing independent bank reconciliations as of December 31. 
D)  Preparing and detail testing a bank transfer schedule. 
A)  Confirming all December 31 bank balances. 
B)  Counting the cash working fund at the close of business on December 31. 
C)  Preparing independent bank reconciliations as of December 31. 
D)  Preparing and detail testing a bank transfer schedule.

Question 8

A company holds bearer bonds as a short-term investment.Responsibility for custody of these bonds and submission of coupons for collections of periodic interest probably should be delegated to the

Accepted Answer

A)  Chief Accountant. 
B)  Internal Auditor. 
C)  Cashier. 
D)  Treasurer. 
A)  Chief Accountant. 
B)  Internal Auditor. 
C)  Cashier. 
D)  Treasurer.

Question 9

Match between columns
                        Premises: This account is the principal cash account of an entity
This account is a separate cash account maintained at the local bank of the entity
This account contains a stipulated amount of cash and is used for limited purposes
This account is typically immaterial in amount and is used for paying certain types of expenses and transactions

Accepted Answer

The Answer of Petty cash account and General cash account is...

Question 10

Examining a sample of cancelled checks for an authorized signature tests which of the following assertions for cash?

Accepted Answer

A)  Authorization. 
B)  Completeness. 
C)  Cutoff. 
D)  Accuracy. 
A)  Authorization. 
B)  Completeness. 
C)  Cutoff. 
D)  Accuracy.

All of the following can assist the auditor in testing the existence assertion for investment securities except:

If fraud is suspected,auditors may complete all of the following procedures except:

An auditor should trace interbank transfers for the last part of the audit period and first part of the subsequent period to detect whether

For each assertion about cash listed below,give an example of a test of transactions for (1)cash receipts and (2)cash disbursements. a.Classification. b.Occurrence. c.Authorization. d.Completeness.

Which of the following control activities would an entity most likely use to assist in satisfying the completeness assertion related to long-term investments?

Of the following,which is the most efficient audit procedure for verification of interest earned on bond investments?

The cashier of Brooke Company covered a shortage in the cash working fund with cash obtained on December 31 from a local bank by cashing,but not recording,a check drawn on the company's out-of-town bank.How would the auditor discover this manipulation?

A company holds bearer bonds as a short-term investment.Responsibility for custody of these bonds and submission of coupons for collections of periodic interest probably should be delegated to the

Examining a sample of cancelled checks for an authorized signature tests which of the following assertions for cash?

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Audit Planning,Types of Audit Tests,and Materiality

Risk Assessment

Evidence and Documentation

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Audit Sampling: An Application to Substantive Tests of Account Balances

Auditing the Revenue Process

Auditing the Purchasing Process

Auditing the Human Resource Management Process

Assurance,Attestation,and Internal Auditing Services

Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting Process: Long-Term Liabilities, Stockholders Equity, and Income Statement Accounts

Completing the Audit Engagement

Reports on Audited Financial Statements

Professional Conduct,Independence,and Quality Control

Legal Liability

Assurance,Attestation,and Internal Auditing Services

Filters

Exam 16: Auditing the Financinginvesting Process: Cash and Investments

All of the following can assist the auditor in testing the existence assertion for investment securities except:

If fraud is suspected,auditors may complete all of the following procedures except:

An auditor should trace interbank transfers for the last part of the audit period and first part of the subsequent period to detect whether

For each assertion about cash listed below,give an example of a test of transactions for (1)cash receipts and (2)cash disbursements. a.Classification. b.Occurrence. c.Authorization. d.Completeness.

Which of the following control activities would an entity most likely use to assist in satisfying the completeness assertion related to long-term investments?

Of the following,which is the most efficient audit procedure for verification of interest earned on bond investments?

The cashier of Brooke Company covered a shortage in the cash working fund with cash obtained on December 31 from a local bank by cashing,but not recording,a check drawn on the company's out-of-town bank.How would the auditor discover this manipulation?

A company holds bearer bonds as a short-term investment.Responsibility for custody of these bonds and submission of coupons for collections of periodic interest probably should be delegated to the

Examining a sample of cancelled checks for an authorized signature tests which of the following assertions for cash?

An Introduction to Assurance and Financial Statement Auditing

The Financial Statement Auditing Environment

Audit Planning,Types of Audit Tests,and Materiality

Risk Assessment

Evidence and Documentation

Internal Control in a Financial Statement Audit

Auditing Internal Control Over Financial Reporting

Audit Sampling: An Overview and Application to Tests of Controls

Audit Sampling: An Application to Substantive Tests of Account Balances

Auditing the Revenue Process

Auditing the Purchasing Process

Auditing the Human Resource Management Process

Assurance,Attestation,and Internal Auditing Services

Auditing the Financinginvesting Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment

Auditing the Financinginvesting Process: Long-Term Liabilities, Stockholders Equity, and Income Statement Accounts

Completing the Audit Engagement

Reports on Audited Financial Statements

Professional Conduct,Independence,and Quality Control

Legal Liability

Assurance,Attestation,and Internal Auditing Services

Filters