Kayla Harbaugh
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Auditing Chapter 10 Homework

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Kayla Harbaugh
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Auditing Chapter 10 Homework

Auditing Chapter 10 Homework

Pregunta 1 de 30

1

Which one of the following risks is not a risk associated with cash?

Selecciona una de las siguientes respuestas posibles:

  • a. Complex valuation issues.

  • b. Large volume of transactions.

  • c. Importance of meeting debt covenants.

  • d. Easy to manipulate.

Explicación

Pregunta 2 de 30

1

The cash account is significant to the auditor for which of the following reasons?

Selecciona una de las siguientes respuestas posibles:

  • a. The cash account balance is the culmination of a large volume of transactions.

  • b. The cash account is not as susceptible to fraud as most other accounts.

  • c. Cash is the only account that provides opportunity for fraud.

  • d. Automated systems do not possess the capability to maintain strong internal controls over cash.

Explicación

Pregunta 3 de 30

1

Which of the following situations would normally be discovered by testing the bank reconciliation?

Selecciona una de las siguientes respuestas posibles:

  • a. Failure to bill a customer.

  • b. Payment to an employee for more hours than she worked.

  • c. Failure to include a deposit in transit on the bank reconciliation.

  • d. Duplicate payment of a vendor’s invoice.

Explicación

Pregunta 4 de 30

1

Which of the following is not a normal edit test as part of computerized control for checks?

Selecciona una de las siguientes respuestas posibles:

  • a. Field checks.

  • b. Reasonableness tests.

  • c. Cross-references.

  • d. Self-checking digits.

Explicación

Pregunta 5 de 30

1

Which one of the following is not a fundamental internal control the auditor would expect to find in place for a cash processing system?

Selecciona una de las siguientes respuestas posibles:

  • a. Segregation of duties.

  • b. Electronic payments.

  • c. Periodic internal audits.

  • d. Authorization of transactions.

Explicación

Pregunta 6 de 30

1

As cash processing systems become more automated and integrated, which of the following is true about the general concept of segregation of duties?

Selecciona una de las siguientes respuestas posibles:

  • a. Segregation of duties becomes completely computerized without human involvement.

  • b. The importance of segregation of duties does not change.

  • c. Segregation of duties becomes less important.

  • d. Segregation of duties becomes more important.

Explicación

Pregunta 7 de 30

1

Which of the following controls would be most successful in mitigating the theft of customer checks received in the mail?

Selecciona una de las siguientes respuestas posibles:

  • a. Custody of receipts by the accounts receivable manager.

  • b. Weekly deposits to a secure bank.

  • c. Restrictive endorsements placed on checks as soon as they arrive.

  • d. Reconciliation of bank accounts each month.

Explicación

Pregunta 8 de 30

1

Electronic authorization privileges for cash transactions may be best assigned to individuals based on which of the following?

Selecciona una de las siguientes respuestas posibles:

  • a. Roles and activities falling within appropriate segregation of duties.

  • b. Encrypted passwords memorized by employees.

  • c. Identification cards with picture identification.

  • d. The principle of "absolute knowledge."

Explicación

Pregunta 9 de 30

1

Which of the following describes documents that accompany customer payments to help the clerk identify the payments?

Selecciona una de las siguientes respuestas posibles:

  • a. Accommodation certificates such as authenticated customer tokens.

  • b. Turnaround documents such as remittance advices.

  • c. Checks stamped with restrictive endorsements such as customer signatures.

  • d. Receipts such as register tapes.

Explicación

Pregunta 10 de 30

1

Which of the following is the primary reason the auditor obtains and reviews a cutoff bank statement?

Selecciona una de las siguientes respuestas posibles:

  • a. Foot the cutoff bank statement for completeness.

  • b. Test for intentional lapping of bank transfers.

  • c. Verify the balance of cash per the bank's general ledger at the balance sheet date.

  • d. Verify the reconciling items on the year-end bank reconciliation.

Explicación

Pregunta 11 de 30

1

The auditor will send a standard bank confirmation to which of the following?

Selecciona una de las siguientes respuestas posibles:

  • a. Financial institutions for which the client has a balance greater than $0 at the end of the year.

  • b. Financial institutions with which the client has transacted during the year.

  • c. Financial institutions of customers using the lockbox.

  • d. Financial institutions used by significant shareholders.

Explicación

Pregunta 12 de 30

1

The ease with which cash can be stolen is most related to which of the following risks?

Selecciona una de las siguientes respuestas posibles:

  • a. Control risk.

  • b. Liquidity risk.

  • c. Inherent risk.

  • d. Detection risk.

Explicación

Pregunta 13 de 30

1

Which of the following best describes a fraudulent scheme to overstate cash assets at year-end by recording deposits in transit in both the account from which the cash is withdrawn and the account to which it is transferred?

Selecciona una de las siguientes respuestas posibles:

  • a. Restrictive endorsements of cash.

  • b. Lapping of cash.

  • c. Embezzlement of cash.

  • d. Kiting of cash.

Explicación

Pregunta 14 de 30

1

The emphasis in verifying petty cash is normally on which of the following?

Selecciona una de las siguientes respuestas posibles:

  • a. Year-end balance.

  • b. Balance sheet classification.

  • c. Controls over petty cash.

  • d. Transactions for the period.

Explicación

Pregunta 15 de 30

1

When auditing marketable securities, the auditor will do which of the following?

Selecciona una de las siguientes respuestas posibles:

  • a. Examine broker's advices evidencing purchase of securities.

  • b. Recompute income.

  • c. Foot schedule.

  • d. Both A and B.

  • e. All of the above.

Explicación

Pregunta 16 de 30

1

The reported fair market value of securities held by the client can be verified by the auditor through which of the following procedures?

Selecciona una de las siguientes respuestas posibles:

  • a. Comparing the values to those securities held by the auditing firm.

  • b. Confirming the fair values with the client as of the close of the year.

  • c. Comparing the fair values to credible publications and websites.

  • d. Comparing the fair values with the fair values of similar securities.

Explicación

Pregunta 17 de 30

1

Which of the following items would not normally appear on bank reconciliations?

Selecciona una de las siguientes respuestas posibles:

  • a. Outstanding deposits list.

  • b. Balance per bank.

  • c. Balance per books.

  • d. Outstanding checks list.

Explicación

Pregunta 18 de 30

1

Investments in securities are classified as which of the following?

Selecciona una de las siguientes respuestas posibles:

  • a. Held-to-maturity.

  • b. Trading securities.

  • c. Available-for-sale securities.

  • d. All of the above.

Explicación

Pregunta 19 de 30

1

Which of the following would not be used as part of analytical procedures for marketable securities?

Selecciona una de las siguientes respuestas posibles:

  • a. Review changes in the balances, risk composition, and classification types.

  • b. Verify ending balances prior to calculating the percent change.

  • c. Develop expectations about the level of amounts in ending balances.

  • d. Develop expectations about the relationship between the balances.

Explicación

Pregunta 20 de 30

1

Which assertion related to investments is tested when the auditor examines the documents for any restrictions?

Selecciona una de las siguientes respuestas posibles:

  • a. Rights.

  • b. Completeness.

  • c. Valuation.

  • d. Existence.

Explicación

Pregunta 21 de 30

1

Which of the following types of securities is valued at amortized cost, subject to an impairment test?

Selecciona una de las siguientes respuestas posibles:

  • a. Available-for-sale securities.

  • b. Trading securities.

  • c. Cash equivalent securities.

  • d. Held-to-maturity securities.

Explicación

Pregunta 22 de 30

1

Which of the following procedures does the auditor typically perform when testing the existence of cash?

Selecciona una de las siguientes respuestas posibles:

  • a. Counting cash at the depository institution.

  • b. Inquiry of management.

  • c. Tracing the bank reconciliation to the general ledger.

  • d. Sending a standard bank confirmation.

Explicación

Pregunta 23 de 30

1

When testing cash balances at the balance sheet date, the auditor foots the bank reconciliation and traces its reported book balance to the trial balance and its bank balance to the standard confirmation. Which of the following assertions is being tested with these procedures?

Selecciona una de las siguientes respuestas posibles:

  • a. Valuation.

  • b. Rights.

  • c. All of the above.

  • d. Existence.

Explicación

Pregunta 24 de 30

1

Assume that an auditor notes a large series of checks that does not clear the bank for an unusually long time after period end. Which of the following would the auditor likely suspect from this observation?

Selecciona una de las siguientes respuestas posibles:

  • a. Cash does not exist.

  • b. Vendors are eager to get their payments.

  • c. The reconciliation is accurate.

  • d. The presence of held checks at period-end.

Explicación

Pregunta 25 de 30

1

Which of the following is not a common test of controls for marketable securities?

Selecciona una de las siguientes respuestas posibles:

  • a. Review broker’s advice for accurate recording of security.

  • b. Review the minutes of the board meetings.

  • c. Review reports of internal audits.

  • d. Inquire of management about its process for reclassifications.

Explicación

Pregunta 26 de 30

1

Interbank transfer schedules are used by the auditor to address which of the following concerns?

Selecciona una de las siguientes respuestas posibles:

  • a. Lapping.

  • b. Kiting.

  • c. Embezzlement by omitting outstanding checks on reconciliation.

  • d. All of the above.

Explicación

Pregunta 27 de 30

1

The cutoff bank statement is used by the auditor to address which of the following concerns?

Selecciona una de las siguientes respuestas posibles:

  • a. Lapping.

  • b. Kiting.

  • c. Omitting outstanding checks on reconciliations.

  • d. All of the above.

Explicación

Pregunta 28 de 30

1

Which of the following is not an internal control the auditor would expect to find in place for all cash processing systems?

Selecciona una de las siguientes respuestas posibles:

  • a. Independent reconciliation.

  • b. Restrictive endorsement of checks.

  • c. Prenumbered cash receipt documents.

  • d. Walkthrough.

Explicación

Pregunta 29 de 30

1

Which of the following is a cash management technique frequently used by management?

Selecciona una de las siguientes respuestas posibles:

  • a. Cash management agreement with financial institutions.

  • b. Lockboxes.

  • c. Electronic funds transfers.

  • d. All of the above.

Explicación

Pregunta 30 de 30

1

The auditor prepares a schedule for marketable securities. Which of the following is not one of the items in the schedule related to the value of the securities?

Selecciona una de las siguientes respuestas posibles:

  • a. Carrying value for debt instruments.

  • b. Interest and dividends.

  • c. Year-end market value.

  • d. Cost.

Explicación

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