An unrecorded check written at the beginning of the month which was cashed during the period

covered by the reconciliation.

In October, three months before year-end, the bookkeeper erroneously recorded the receipt of a one
year bank loan with a debit to cash and a credit to miscellaneous revenue. Select the most effective
method for detecting this type of error.

Send a bank confirmation as of year-end.

Jones embezzled $10,000 from his company's account in Bank A. At year-end he hid the shortage by
making a deposit on December 31 in Bank A, drawn on Bank B. He has not recorded the transaction on
the books. This is an example of:

Kiting.

Jones embezzled $10,000 from his company's account in Bank A. At year-end he hid the shortage by
making a deposit on December 31 in Bank A, drawn on Bank B. He has not recorded the transaction on
the books. Which of the following is most likely to be effective in detecting this fraud?    

Comparison of bank cutoff statement to the cash receipts and disbursements records.

Which of the following is not a universal rule for achieving internal control over cash?

Separate recordkeeping from accounting for cash to the extent possible.

Which of the following is not a control over cash disbursements?

Documents supporting the payment of a disbursement should be canceled by the person preparing
the check to prevent reuse.

Which of the following is the best audit procedure for the detection of lapping?

Comparison of postings of cash receipts to accounts with the details of cash deposits.

Which of the following manipulations of cash transactions would overstate the cash balance on the
financial statements?

Understatement of outstanding checks.

Which of the following is not confirmed on the standard form used for cash balances at financial
institutions?

Securities held for the client by the financial institution.

Internal control over marketable securities is enhanced when:

Securities are held under joint control of two or more officials.

In a manufacturing company which one of the following audit procedures would give
the least assurance of the existence of the assets in the general ledger balance of investment in stocks
and bonds at the audit date?

Examination of paid checks issued in payment of securities purchased.

The Standard Form to Confirm Account Balances with Financial Institutions includes information on all of
the following except:

The principal amount paid on a direct liability.   

The auditors should insist that a representative of the client be present during the physical examination
of securities in order to:

Acknowledge the receipt of securities returned.   

The auditors' count of the client's cash should be coordinated to coincide with the:

Count of investment securities.

The auditors compare information on canceled checks with information contained in the cash
disbursement journal. The objective of this test is to determine that:

No discrepancies exist between the data on the checks and the data in the journal.

Jones was engaged to audit the financial statements of Gamma Corporation for the year ended June 30,
200X. Having completed an examination of the investment securities, which of the following is the best
method of verifying the accuracy of recorded dividend income?

Comparing recorded dividends with a standard financial reporting service's record of dividends.   

Which of the following is one of the better auditing techniques that might be used by an auditor to
detect kiting?

Prepare a schedule of bank transfers.

Which one of the following would the auditor consider to be an incompatible operation if the cashier
receives remittances from the mailroom?

The cashier posts the receipts to the accounts receivable subsidiary ledger.

As one of the year-end audit procedures, the auditor instructed the client's personnel to prepare a
confirmation request for a bank account that had been closed during the year. After the client's
treasurer has signed the request, it was mailed by the assistant treasurer. What is the major flaw in this
audit procedure?

The request was mailed by the assistant treasurer.