Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Chapter 18, Problem 6DQP
To determine
Evaluate the given statement about auditor concerning tests of acquisitions and cash disbursements.
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Which of the following procedures would an auditor most likely perform in searching for unrecorded liabilities?
A. Vouch a sample of cash disbursements recorded just after year end to receiving reports and vendor invoices.
B. Compare a sample of purchase orders issued just after year-end with the year-end accounts payable balance.
C. Scan the cash disbursement entries recorded just before year end for indications of unusual transactions.
D. Vouch a sample of accounts payable entries recorded just before year end to the unmatched receiving report file.
when auditing a client's year end cash balance, an auditor uses standard bank confirmations and performs tests on the clients year end bank reconciliations. These substantive procedures test which of the following assertions?
a. understandability of presentation and classification
b. cutoff
c. completeness and valuation and allowance
d. rights and obligations, and occurence
Which of the following procedures would an auditor most likely perform in searching for unrecorded liabilities? O Compare a sample of purchase orders issued just after year-end with the year-end accounts payable trial balance. Trace a sample of accounts payable entries recorded just before year-end to the unmatched receiving report file. O Scan the cash disbursements entries recorded just before year-end for indications of unusual transactions. O Vouch a sample of cash disbursements recorded just after year-end to receiving reports and vendor invoices.
Chapter 18 Solutions
Auditing And Assurance Services
Ch. 18 - List five asset accounts, three liability...Ch. 18 - Prob. 2DQPCh. 18 - Prob. 3DQPCh. 18 - Prob. 4DQPCh. 18 - Prob. 5DQPCh. 18 - Prob. 6DQPCh. 18 - Prob. 7DQPCh. 18 - Prob. 8DQPCh. 18 - Prob. 9DQPCh. 18 - Prob. 10DQP
Ch. 18 - Prob. 11DQPCh. 18 - Prob. 13DQPCh. 18 - Prob. 14DQPCh. 18 - Prob. 15DQPCh. 18 - Prob. 16.1MCQCh. 18 - Prob. 16.2MCQCh. 18 - Prob. 16.3MCQCh. 18 - Prob. 17.1MCQCh. 18 - Prob. 17.2MCQCh. 18 - Prob. 17.3MCQCh. 18 - Prob. 18.1MCQCh. 18 - Prob. 18.2MCQCh. 18 - Prob. 18.3MCQCh. 18 - Prob. 19DQPCh. 18 - Prob. 20DQPCh. 18 - Prob. 21DQPCh. 18 - Prob. 22DQPCh. 18 - The following misstatements are included in the...Ch. 18 - Prob. 24DQPCh. 18 - Prob. 25DQPCh. 18 - Prob. 26DQPCh. 18 - Prob. 27DQPCh. 18 - Prob. 28DQPCh. 18 - Prob. 30C
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- Add: Balance per Bank at 12/31/2019 Viking Soup, Inc. Bank Reconciliation 12/31/2019 General Cash Account Deposit in Transit Deduct: Outstanding Checks Check #3147 Check #3149 Check #3152 Balance per Books at 12/31/2019 $1,672,9804 156,745 (372,500) (5,437) (67,842) $1,383,946 A B Carrow_forwardYou are auditing Abra Inc's cash in bank for the year ended December 31, 2021. You assessed control risk over cash related cycles at the maximum level, thus you have decided to render an extensive substantive test procedure. As a result you ascertained the following information related to the company's bank reconciliation items for two months: November 30 December 31 Cash per books P82,350 P221,425 Cash per bank statements 535,410 689,085 Undeposited collections 41,005 Outstanding checks 138,590 Bank service charges 3,600 3,000 Insufficient fund check 4,250 Company's notes receivable collected by bank 359,075 404,500 The bank statement and the company's cash records show the following totals: Checks and debit memos per bank statement, P1,091,865 Cash receipts per cash records, P1,182,260 Cash disbursements per cash records, P1,043,185 Deposits and credit memos per bank statement, P1,245,540 The insufficient fund check was redeposited in the same month. The company recorded the receipt…arrow_forwardYou are auditing Abra Inc.’s cash in bank for the year ended December 31, 2021. You assessed control risk over cash related cycles at the maximum level, thus you have decided to render an extensive substantive test procedure. As a result you ascertained the following information related to the company’s bank reconciliation items for two months: November 30 December 31 Cash per books P82,350 P221,425 Cash per bank statements 535,410 689,085 Undeposited collections 41,005 ? Outstanding checks 138,590 ? Bank service charges 3,600 3,000 Insufficient fund check 4,250 Company’s notes receivable collected by bank 359,075 404,500 The bank statement and the company’s cash records show the following totals: Checks and debit memos per bank statement, P1,091,865 Cash receipts per cash records, P1,182,260 Cash disbursements per cash records, P1,043,185 Deposits and credit memos per bank statement, P1,245,540 The…arrow_forward
- Assume that you have audited accounts receivable as of 12/31/2020 and are confident that the ending balance should be $7,188,000. Further, you know that the audited balance as of 12/31/2019 was $8,462,000. You also verified cash deposits from customers through a review of the bank account. Based on that review you believe that cash receipts from customers ranges from an amount of $40,000,000 to $41,000,000. Which amount below would represent an overstatement of revenue for the year ending 12/31/2020, based on the facts above? 1. $38,500,000 2. $41,000,000 3. $39,762,000 4. $39,100,000arrow_forwardThe CPAs test of detail transactions included the following auditing procedures which were undertaken for a selected test-month: CASH RECEIPTS: Reconciled credits per bank statement with receipts per book. Traced deposits to remittance advices. Traced totals to the general ledger. Footed the cash book. CASH DISBURSEMENTS: E. Compared cancelled checks with check register for name, signature, payee and endorsement. F. Footed check register G. Traced totals to the general ledger. H. Examined invoices, cash vouchers and other documents supporting disbursements (other than payroll disbursements) I. Reconciled recorded disbursements with charges per bank statement. Directions: Below are presented some of the more common methods of concealing shortages. For each of these items, indicate the letter of the auditing procedure listed above which most likely to uncover the shortage. If the answer is "NONE", so state on the space provided. No. Items ANSWER 1. Check included in petty cash…arrow_forwardIn your audit of Ginko Company, you have received a cash confirmation and a cutoff statement from the bank on Ginko’s one bank account. Prepare a list of substantive procedures for Ginko’s casharrow_forward
- The following are commonly performed tests of controls and substantive tests of transactions audit procedures in the sales and collection cycle: Review the prelisting of cash receipts to determine whether cash is prelisted daily. Reconcile the recorded cash receipts on the prelisting with the cash receipts journal and the bank statement for a one-month period. Account for a sequence of shipping documents and examine each one to make sure that a related sales invoice exists. Account for a sequence of sales invoices and examine each one to make sure that a related shipping document exists. Compare the quantity and description of items on shipping documents with the related sales invoices. Trace recorded sales in the sales journal to the related accounts receivable master file and compare the customer name, date, and amount for each one. Examine sales returns for approval by an authorized official. Required Identify whether each audit procedure is a test of control or a…arrow_forwardWhy is there a greater emphasis on the detection of fraudin tests of details of cash balances than for other balance sheet accounts? Give two specificexamples that demonstrate how this emphasis affects the auditor’s evidence accumulation in auditing year-end cash.arrow_forwardQUESTIONS:Based on the above and result of your audit, determine the following: Cash receipts per bank in Mayarrow_forward
- Which of the following provides the highest-quality evidence regarding the Valuation of recorded accounts payable? Question 5 options: Inspecting invoices for all cash disbursements during the year. Performing analytical procedures. Confirming balances with creditors and suppliers. Recalculating the balance of accounts payable.arrow_forwardThe auditors of Steffey Ltd., decided to study the cash receipts and disbursements for the month of July of the current year under audit. They obtained the bank reconciliations and the cash journals prepared by the company accountants, which revealed the following: June 30: Bank balance, $355,001; deposits in transit, $86,899; outstanding checks, $42,690; general ledger cash balance, $399,210. July 1: Cash receipts journal, $650,187; cash disbursements journal, $565,397. July 31: Bank balance, $506,100; deposits in transit, $51,240; outstanding checks, $73,340; general ledger cash balance, $484,000. Bank statement record of deposits: $835,846; of payments: $684,747. Required: Prepare a four-column proof of cash covering the month of July of the current year. (Negative amounts or amounts to be deducted should be indicated by a minus sign.)arrow_forwardKiting would least likely be detected by: a. Analyzing details of large cash deposits around year end. b. Comparing customer remittance advices with recorded disbursements in the cash disbursements journal. c. Preparing a four-column bank reconciliation for all major cash accounts. d. Preparing a schedule of interbank transfers by using the client's records and bank statements around year end.arrow_forward
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