ACAUD - FA 5 Flashcards - Quiz

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Social Science Economics Finance
ACAUD - FA 5
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Definition
Term 1 / 18
g
That cash on hand as shown in the general ledger is represented by currency and coins on hand
Ownership and proper accountabilities That cash balances are available without
restrictions
a. b. c. d.
B
Yes Yes Yes Yes
No Yes No Yes
No Yes Yes No
Textbook solutions for this set
Glencoe Accounting: First Year Course

1st Edition
Glencoe McGraw-Hill
548 solutions
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Terms in this set (18)

ACAUD - FA 5 Study
The primary audit objective for cash is to establish

that the balance is properly stated. This involves
determining:
That cash on hand as shown in the general ledger is

represented by currency and coins on hand
Ownership and proper accountabilities That cash

B
balances are available without
restrictions
a. b. c. d.
Yes Yes Yes Yes
No Yes No Yes
No Yes Yes No
ACAUD - FA 5 An auditor for a large service company is performing

Study
an audit of the company's cash balance. The auditor
is considering the most appropriate audit procedure
to use to ensure that the amount of cash is accurately
recorded on the company's financial statements. The
most appropriate audit procedures for the objective
are
a. Examine bank reconciliations, confirm bank

balances, and verify cut off of receipts and
disbursements; foot totals of reconciliations and
compare to cash account balances.
b. Review collection procedures and perform an

A analytical review of accounts receivable; confirm
balances of accounts receivable; and verify the
existence of appropriate
procedures and facilities.
c. Compare cash receipt lists with the receipts journal

and bank deposit slips; review the
segregation of duties, observe, and test cash

receipts.
d. Review the organizational structure and functional

responsibilities; verify the existence
and describe protection procedures for unused

checks, including security measures.
ACAUD - FA 5 Cash receipts should be deposited on the day of

Study
receipt or the following business day. Select the most
appropriate audit procedure to determine that cash
is promptly deposited.
a. Review the functions of cash receiving and

disbursing for proper separation of duties.
b. Review cash register tapes prepared for each sale.
D
c. Review the functions of cash handling and
maintaining accounting records for proper
separation of duties.
d. Compare the daily cash receipts totals with the

bank deposits.
Which of the following sets of information does an

auditor usually confirm on one form?
form?
a. Cash in bank and collateral for loans.
b. Accounts payable and purchase commitments.
A
c. Accounts receivable and accrued interest
receivable.
d. Inventory on consignment and contingent

liabilities.
The primary purpose of sending a standard

confirmation request to financial institutions with
which the client has done business during the year is

to.
a. Corroborate information regarding deposit and

loan balances.
A
b. Provide the data necessary to prepare a proof of
cash.
c. Detect kiting activities that may otherwise not be

discovered.
d. Request information about contingent liabilities

and secured transactions.
ACAUD - FA 5 An auditor ordinarily sends a standard confirmation

Study
request to all banks with which the client has done
business during the year under audit, regardless of
the year-end-balance. A purpose of this procedure is
to
a. Request a cutoff bank statement and related

C checks be sent to the auditor.
b. Detect kiting activities that may otherwise not be

discovered.
c. Seek information about contingent liabilities and

security agreements.
d. Provide the data necessary to prepare a proof of

cash.
As one of the year-end audit procedures, the auditor

instructed the client's personnel to prepare a
standard bank confirmation request for a bank
account that had been closed during the year. After
the client's treasurer had signed the request, it was
mailed by the assistant treasurer. What is the major
flaw in this audit procedure?
D
a. The CPA did not sign the confirmation request
before it was mailed.
b. Sending the request was meaningless because the

account was closed before year-end.
c. The confirmation request was signed by the

treasurer.
d. The request was mailed by the assistant treasurer.
ACAUD - FA 5 The usefulness of the standard bank confirmation

Study
request may be limited because the bank employee
who completes the form may.
a. Not believe that the bank is obligated to verify

confidential information to a third party.
b. Be unaware of all the financial relationships that the

B
bank has with the client.
c. Sign and return the form without inspecting the

accuracy of the client's bank
reconciliations.
d. Not have access to the client's cutoff bank

statement.
An auditor who is engaged to examine the financial

statements of a business entity will request
cutoff bank statement primarily in order to
a. Detect lapping.
C b. Detect kiting.
c. Verify reconciling items on the client's bank

reconciliation.
d. Verify the cash balance reported on the bank

confirmation inquiry form.
Which of the following auditing procedures would

the auditor not apply to a cutoff bank statement?
a. Trace year end outstanding checks and deposits in

transit to the cutoff bank statement.
b. Reconcile the bank account as of the end of the

cutoff period.
B
c. Compare dates, payees and endorsements on
returned checks with the cash
disbursements record.
d. Determine that the year-end deposit in transit was

credited by the bank on the first
working day of the following accounting period.
ACAUD - FA 5 A client maintains two bank accounts. One of the

Study
accounts, Bank A, has an overdraft of P100,000. The
other account, Bank B, has a positive balance of
P50,000. To conceal the overdraft from the auditor,
the client may decide to
a. Draw a check for at least P100,000 on Bank A for

deposit in Bank B. Record the receipt but not the
disbursement and list the receipt as a deposit in
transit. Record the disbursement at the beginning of
the following year.
b. Draw a check for at least P100,000 on Bank B for

deposit in Bank A. Record the receipt but not the
disbursement and list the receipt as a deposit in
B
transit. Record the disbursement at the beginning of
the following year.
c. Draw a check for P100,000 on Bank B for deposit in

Bank A. Record the disbursement but not the receipt.
List the disbursement as an outstanding check, but do
not list the receipt as a deposit in transit. Record the
receipt at the beginning of the following period.
d. Draw a check for at least P100,000 on Bank A for

deposit in Bank B. Record the disbursement but not
the receipt and list the disbursement as an
outstanding check. Record the receipt at the
beginning of the following year.
ACAUD - FA 5 While performing an audit of cash, an auditor begins

Study
to suspect check kiting. Which of the following is the
best evidence that the auditor could obtain
concerning whether kiting is taking place?
a. Documentary evidence obtained by vouching

credits on the latest bank statement to supporting
documents.
D
b. Documentary evidence obtained by vouching
entries in the cash account to supporting documents.
c. Oral evidence obtained by discussion with

controller personnel.
d. Evidence obtained by preparing a schedule of

interbank transfers.
Two months before year-end, the bookkeeper

erroneously recorded the receipt of a long-term
bank loan by a debit to cash and a credit to sales.
Which of the following is-the most effective
A procedure for detecting this type of error?
a. Analyze bank confirmation information.
b. Analyze the notes payable journal.
c. Prepare year-end bank reconciliation.
d. Prepare a year-end bank transfer schedule.
Postdated checks received by mail in settlement of

customer's accounts should be
a. Returned to customer.
B b. Stamped with restrictive endorsement.
c. Deposited immediately by the cashier.
d. Deposited the day after together with cash

receipts.
ACAUD - FA 5 The cashier of Weakness Company covered a Study

shortage in the cash working fund with cash obtained
at December 31 from a bank by cashing but not
recording a check drawn on the company out of
town bank. How would you as an auditor discover the
manipulation?
a. By confirming all December 31 bank balances.
C
b. By counting the cash working fund at the close of
business on December 31.
c. By investigating items returned with the bank cut-

off statements of the succeeding
month.
d. By preparing independent bank reconciliations as

of December 31.
An essential phase of the audit of the cash balance at

the end of the year is the auditor's review of cutoff
bank statement. This specific procedure is not useful
in determining if
B a. Kiting has occurred.
b. Lapping has occurred.
c. The cash receipts journal was held open.
d. Disbursements per the bank statement can be

reconciled with total checks written.
A proof of cash is used by an auditor to
a. Prove the correctness of the cash balance in the

client's year-end statement of financial position.
b. Prove that the client's bank did not make an error

during the period under examination.
C
c. Determine if there were any unauthorized
disbursements or unrecorded deposits during
the reconciliation period.
d. Comply with Philippine Auditing Practice

Statements.
ACAUD - FA 5 Which of these is not required to be included inStudy

an
auditor's cash count report?
a. The audited balance of the fund.
b. The date and time of the count.
A c. That the count was made in the presence of the

custodian.
d. That the items counted were returned intact to the

custodian.

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9/16/22, 9:38 PM ACAUD - FA 5 Flashcards | Quizlet

Social Science Economics Finance

Textbook solutions for this set

Glencoe Accounting: First Year Course

Search for a textbook or question

Terms in this set (18)

The primary audit objective for cash is to establish

That cash on hand as shown in the general ledger is

Ownership and proper accountabilities That cash

Yes Yes Yes Yes

ACAUD - FA 5 An auditor for a large service company is performing

a. Examine bank reconciliations, confirm bank

b. Review collection procedures and perform an

procedures and facilities.

c. Compare cash receipt lists with the receipts journal

segregation of duties, observe, and test cash

d. Review the organizational structure and functional

and describe protection procedures for unused

ACAUD - FA 5 Cash receipts should be deposited on the day of

a. Review the functions of cash receiving and

b. Review cash register tapes prepared for each sale.

d. Compare the daily cash receipts totals with the

Which of the following sets of information does an

b. Accounts payable and purchase commitments.

d. Inventory on consignment and contingent

The primary purpose of sending a standard

which the client has done business during the year is

a. Corroborate information regarding deposit and

c. Detect kiting activities that may otherwise not be

d. Request information about contingent liabilities

ACAUD - FA 5 An auditor ordinarily sends a standard confirmation

a. Request a cutoff bank statement and related

b. Detect kiting activities that may otherwise not be

c. Seek information about contingent liabilities and

d. Provide the data necessary to prepare a proof of

As one of the year-end audit procedures, the auditor

b. Sending the request was meaningless because the

c. The confirmation request was signed by the

d. The request was mailed by the assistant treasurer.

ACAUD - FA 5 The usefulness of the standard bank confirmation

a. Not believe that the bank is obligated to verify

b. Be unaware of all the financial relationships that the

c. Sign and return the form without inspecting the

d. Not have access to the client's cutoff bank

An auditor who is engaged to examine the financial

cutoff bank statement primarily in order to

c. Verify reconciling items on the client's bank

d. Verify the cash balance reported on the bank

Which of the following auditing procedures would

a. Trace year end outstanding checks and deposits in

b. Reconcile the bank account as of the end of the

d. Determine that the year-end deposit in transit was

working day of the following accounting period.

ACAUD - FA 5 A client maintains two bank accounts. One of the

a. Draw a check for at least P100,000 on Bank A for

b. Draw a check for at least P100,000 on Bank B for

c. Draw a check for P100,000 on Bank B for deposit in

d. Draw a check for at least P100,000 on Bank A for

ACAUD - FA 5 While performing an audit of cash, an auditor begins

a. Documentary evidence obtained by vouching

c. Oral evidence obtained by discussion with

d. Evidence obtained by preparing a schedule of

Two months before year-end, the bookkeeper