Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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 3

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

Accepted Answer

A) True 
 B)False

Question 4

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 5

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.

Question 6

Completeness is an important objective for derivative financial instruments.

Accepted Answer

A) True 
 B)False

Question 7

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 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

Question 9

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.

Question 10

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 11

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

Question 12

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 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.

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 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 16

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

Accepted Answer

A)   
B)   
C)   
D)

Question 17

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.

Question 18

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 19

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 20

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...

Exam 23: Audit of Cash and Financial Instruments

Completeness is an important objective for derivative financial instruments.

Correct Answer
verified

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

Correct Answer
verified
Auditors test the bank reconciliation to...
View Answer

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified
A cutoff bank statement is a partial-per...
View Answer

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

Correct Answer
verified

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

Correct Answer
verified
1. Failure to include a check that has n...
View Answer

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

Correct Answer
verified

Match six of the terms (a-k)with the descriptions/definitions provided below (1-6):

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

Correct Answer
verified

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.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified
1. Reconcile the balance on the bank sta...
View Answer

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

Correct Answer
verified

Which of the following is a correct statement?

Correct Answer
verified

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

Correct Answer
verified

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.

Correct Answer
verified

Exam 23: Audit of Cash and Financial Instruments

Completeness is an important objective for derivative financial instruments.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedAuditors test the bank reconciliation to...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedA cutoff bank statement is a partial-per...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct Answerverified1. Failure to include a check that has n...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Match six of the terms (a-k)with the descriptions/definitions provided below (1-6):

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct Answerverified1. Reconcile the balance on the bank sta...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is a correct statement?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
Auditors test the bank reconciliation to...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A cutoff bank statement is a partial-per...
View Answer

Correct Answer
verified

Correct Answer
verified
1. Failure to include a check that has n...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
1. Reconcile the balance on the bank sta...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified