5 Written questions
4 Matching questions
- To gather evidence regarding the balance per bank on a bank reconciliation, an auditor could examine all of the following except: A-Cutoff bank statement. B-Year-end bank statement. C-Bank confirmation. D-General ledger.
- Voucher (386)
- A security owned by a company is from another company that recently declared bankruptcy. Which of the following is the auditor's primary concern with the investment? A-Existence B-Presentation C-Completeness D-Valuation
- The accounting functions and the cash receipts functions should be handled by which department(s)? A-Both functions should be under the control of the company Treasurer B-Both functions should be under the control of the company Controller C-The Controller should have control of accounting functions and the Treasurer should have control of cash receipt functions. D-The Treasurer should have control of accounting functions and the Controller should have control of cash receipt functions.
- a D-Valuation
- b C-The Controller should have control of accounting functions and the Treasurer should have control of cash receipt functions.
- c ...
- d D-General ledger.
5 Multiple choice questions
- B-Checks dated prior to year-end to the outstanding checks listed on the year-end bank reconciliation.
- A notification sent by a stockbrokerage firm to a customer reporting the terms of a purchase or sale of securities.
- D-They may be sent electronically or non-electronically.
5 True/False questions
Which of the following is most likely to indicate fraud? A-Several overpayments are made for goods received from a supplier. B-The year end cash balance does not include cash in transit to the company at year-end. C-A check received after year end was inadvertently recorded as if received before year-end. D-A documented loan to an officer of the company → A-Several overpayments are made for goods received from a supplier.
An auditor examining check disbursements discovered a missing check number. Upon inquiry to the person responsible for disbursements and reconciliation of the cash account, she is told that the check number is missing because the check was voided. What is the auditor's next step? A-Prepare a bank transfer schedule at to identify the check. B-Examine the bank confirmation to determine whether the check cleared. C-Since the person responsible for disbursements also reconciles the account, no additional procedures are necessary. D-Examine the voided checks file to determine whether the check is in the file. → This act allows financial institutions to creat and process electronic "substitute checks" in place of customer written hard-copy checks. The purpose of this act is to drease the time for check clearing.
Cutoff bank statement (400) → A bank statement covering a specified number of business days (usually 7-10) after the client's balance sheet date. Auditors use this statment to determin the checks issued on or before the blance sheet date and paid during the cutoff period were listed as outstanding on the year-end bank reconciliation. Another use is to determin the reconciling items shown on the year-end bank reconciliation have cleared the bank within a reasonable amout of time.
It is most likely to be efficient to test the controls over financial investments when:A-Controls are thought to be weak. B-Substantive tests may be performed. C-Analytical procedures are possible. D-The company trades or holds a large number of securities. → C-Loans payable
A company owns a large amount of debt securities that pay interest twice a year - August 1 and February 1. On the financial statements the company accrued the 5 months of interest it was due as interest receivable. The auditor should: A-Require the accrual be reversed since the interest has not yet been paid. B-Confirm the interest accrual with the security issuer. C-Require the accrual be reversed since the company could sell the security before interest has been paid. D-Verify the company owns the security, check the accuracy of the accrual, and require no adjustment. → D-Valuation