Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
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Chapter 10, Problem 42OQ
To determine
Identify the primary objective of each substantive procedure.
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An auditor is considering whether the amount of cash is accurately recorded on the financial statements. All of the following are appropriate engagement procedures for the objective except
A. Examining bank reconciliations and confirming bank balances.
B. Comparing cash receipt lists with the receipts journal and bank deposit slips.
C. Adding totals of reconciliations and comparing with cash account balances.
D. Verifying cutoff of receipts and disbursements.
a. Indicate whether each procedure, given below, is a test of control, substantive test of transactions, substantive analytical procedure, or a test of details of balances.
b. Identify the type of evidence for each procedure.
The following are 11 audit procedures taken from an audit program:
1. Discuss the duties of the cash disbursements clerk with him and observe whether he has responsibility for handling cash or preparing the bank reconciliation.
2. Examine vendors’ invoices and other supporting documents to determine whether
large amounts in the repair and maintenance account should be capitalized.
3. Inquire about the accounts payable supervisor’s monthly review of a computer-generated exception report of receiving reports and purchase orders that have not been matched with a vendor invoice.
4. Foot the accounts payable trial balance and compare the total with the general ledger.
5. Confirm accounts payable balances directly with vendors.
6. Account for a sequence of checks in the…
Which of the following substantive audit procedures is most likely to be performed by the auditor to gather evidence in support of the balance per bank?
a. confirm directly with bank
b. compare to general ledger
c. trace to cash receipts journal
d. trace items on the cutoff bank statement to bank reconciliation
e. all of the choices
Chapter 10 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 10 - Prob. 1RQCh. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Prob. 8RQCh. 10 - Prob. 9RQCh. 10 - Prob. 10RQ
Ch. 10 - Prepare an example of lapping of cash receipts,...Ch. 10 - Prob. 12RQCh. 10 - Prob. 13RQCh. 10 - Prob. 14RQCh. 10 - Prob. 15RQCh. 10 - Prob. 16RQCh. 10 - Explain two procedures by which auditors may...Ch. 10 - Prob. 18RQCh. 10 - Prob. 19RQCh. 10 - Prob. 20RQCh. 10 - Prob. 21RQCh. 10 - Prob. 22RQCh. 10 - Prob. 23RQCh. 10 - Prob. 24RQCh. 10 - Prob. 25RQCh. 10 - Prob. 26QRACh. 10 - Henry Mills is responsible for preparing checks,...Ch. 10 - During the first few months of the year, John...Ch. 10 - Prob. 29QRACh. 10 - Prob. 30QRACh. 10 - Prob. 31QRACh. 10 - Prob. 32QRACh. 10 - Prob. 33QRACh. 10 - Prob. 34QRACh. 10 - Prob. 35QRACh. 10 - Prob. 36QRACh. 10 - Prob. 37QRACh. 10 - Select the best answer for each of the following...Ch. 10 - Prob. 38BOQCh. 10 - Prob. 38COQCh. 10 - Prob. 38DOQCh. 10 - Prob. 38EOQCh. 10 - Prob. 38FOQCh. 10 - Reconciliation of the bank account should not be...Ch. 10 - The auditors suspect that a clients cashier is...Ch. 10 - Prob. 38IOQCh. 10 - Prob. 38JOQCh. 10 - Prob. 38KOQCh. 10 - Prob. 38LOQCh. 10 - Which of the following represents a correct...Ch. 10 - Which of the following correctly identifies a risk...Ch. 10 - Which of the following correctly identifies a risk...Ch. 10 - Prob. 39DOQCh. 10 - Prob. 39EOQCh. 10 - Prob. 39FOQCh. 10 - Prob. 40OQCh. 10 - Prob. 41OQCh. 10 - Prob. 42OQCh. 10 - Prob. 43OQCh. 10 - Prob. 44OQCh. 10 - Prob. 45OQCh. 10 - Prob. 46PCh. 10 - Prob. 47PCh. 10 - Prob. 48PCh. 10 - Prob. 49PCh. 10 - Prob. 50ITCCh. 10 - Prob. 51ITCCh. 10 - Prob. 52RDCCh. 10 - Prob. 53EC
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Similar questions
- Summarize common internal controls over cash receipts and cash disbursements. Assess the purpose of a bank confirmation and why bank confirmations are an important piece of audit evidence. What are some errors and frauds that can occur in the revenue cycle? Review the process of confirming accounts receivable balances. Why is it important for auditors to understand revenue recognition rules?arrow_forwardwhen 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 occurencearrow_forward6) Examine the cash receipts journal in the accounting system and compare the amounts received to the corresponding amounts invoiced in the revenue accounting system and to the bank statement evidencing the deposit. This is an example of which of the following? A) audit objective B) audit assertion C) audit procedure D) audit programarrow_forward
- When auditing the cash account, the auditor traces the cash receipts, which are recorded on the cash receipt journal but not on the current period bank statement, to subsequent bank statements. Which of the following audit objectives are tested? A. Classification and cut-off B. Completeness and occurrence C. Occurrence and cut-off D. Completeness and cut-off E. Classification and occurrencearrow_forward22) Use audit software to foot and cross foot the cash disbursements journal and trace the balance to the general ledger. This is which of the following tests A) test of balances B) analytical procedure C) test of transactions D) test of controlarrow_forwardIn testing controls over cash disbursements, an auditor most likely would determine that the person who signs checks also a. Returns the checks to accounts payable.b. Records the payment in the cash disbursements journalc. Stamped "paid" the supporting documents.d. Updates the accounts payable subsidiary ledger.arrow_forward
- 22) Use audit software to foot and crossfoot the cash disbursements journal and trace the balance to the general ledger. This is which of the following tests A) test of balances B) analytical procedure C) test of transactions D) test of controlarrow_forwardOf the following, which is the best example of a substantive test?Select one: a. Examining a sample of cash disbursements to testwhether expenses have been properly approved. b. Confirmation of balances of accounts receivable. c. Flowcharting of the client’s cash receipts system. d. Comparison of signatures on checks to a list ofauthorized signers.arrow_forwardList of Auditing Procedures A. Trace to cash receipts journal. B. Trace to cash disbursements journal. C. Compare to 9/30/X5 general ledger. D. Confirm directly with bank. E. Inspect bank credit memo. F. Inspect bank debit memo. G. Ascertain reason for unusual delay. H. Inspect supporting documents for reconciling item not appearing on cutoff statement. I. Trace items on the bank reconciliation to cutoff statement. J. Trace items on the cutoff statement to bank reconciliation. GENERAL COMPANY Bank Reconciliation 1st National Bank of US Bank Account a. Select 2 procedures b. Select 5 procedures September 30, 20X5 Balance per bank Deposits in transit 9/29/X5 9/30/X5 S 30,300 $ 925 1,175 2,100 32,400 c. Select 5 procedures Outstanding checks #988 8/31/X5 900 #1281 9/26/X5 600 #1285 9/27/X5 350 #1289 9/29/X5 900 #1292 9/30/X5 325 (3,075) 29,325 d. Select 1 procedure e. Select 2 procedures f. Select 1 procedure Customer note collected by bank Error: Check #1282; written on 9/26/X5 for $350…arrow_forward
- Which of the following procedures would an auditor most likely perform to test controls relating to management's assertion about the completeness of cash receipts for cash sales at a retail outlet? O Inquire about employees' access to recorded but undeposited cash. O Compare the cash balance in the general ledger with the bank confirmation request. O Observe the consistency of the employees' use of cash registers and tapes. O Trace deposits in the cash receipts journal to the cash balance in the general ledger.arrow_forwardEvidence comes in various types and has different degrees of reliability. Below are some pairs of various types of evidence: A bank confirmation versus observation of the segregation of duties between cash receipts and recording payment in the accounts receivable subsidiary ledger. An auditor’s recalculation of depreciation versus examination of raw material requisitions. A bank statement included in the client’s records versus the client’s shipping documents. Required: For each pair, indicate which type of evidence is more reliable. Justify your choicesarrow_forwardCash receipts should be deposited on the day of 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. c. Review the functions of cash handling and maintaining accounting records for proper segregation of duties. d. Compare the daily cash receipts totals with the bank depositsarrow_forward
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