Page 42 - eBook Audit Of Financial Statement Components

TUTORIAL

1. Which account is included in each business cycle except inventory
and warehousing?

A Cash
B Accounts receivable
C Accounts payable
D Common stock

2. Which of the following misstatements will probably not be
discovered as part of an audit of the bank reconciliations?
A Payment on notes payable debited directly to the bank by the
bank but not entered in the client's records
B Duplicate payments of a vendor invoice
C Cash received by the client subsequent to the balance sheet date
but recorded as cash receipts in the current year
D Failure to include a check that has not cleared the bank on the
outstanding check list, even though it has been recorded in the
cash disbursements journal

3. Which of the following is a typical impress cash account?
A General cash account
B Petty cash account
C Payroll account
D B and C only

4. Which of the following is a cash equivalent?
A Long term investment
B Marketable securities
C Certificates of deposit
D B and C only

5. During the bank reconciliation process, an employee should
perform the following steps:
A Account for the numerical sequence of checks
B Review month-end interbank transfers
C Review month-end interbank transfers
D A and C only

6. The counting of cash on the last day of the year and subsequently
tracing the cash to deposits in transit and the cash receipts journal
relates to which audit objective for cash?
A Completeness
B Detail-tie-in
C Accuracy
D Cut-off

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