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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Students have asked these similar questions
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.
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
C
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
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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Similar questions
- 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.arrow_forwardAssume 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_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_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_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
- You 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_forwardQUESTIONS:Based on the above and result of your audit, determine the following: Cash receipts per bank in Mayarrow_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_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_forwardTiming of Test of Controls and Sample Selection. Susan Hill was examining controlsfor the authorization of cash disbursements. She selected cash disbursement entries madethroughout the year and vouched them to paid invoices and canceled checks bearing the initials and signatures of employees authorized to approve the disbursements. She performedthe work on September 30 when the company had issued checks numbered 43921 to 52920.Because 9,000 checks had been issued in nine months, she reasoned that 3,000 more couldbe issued in the three months before the December 31 year-end. About 12,000 checks hadbeen issued last year. She wanted to take one sample of 100 disbursements for the entireyear, so she selected 100 random numbers in the sequence 43921 to 55920. She audited the80 checks in the sample that were issued before September 30, and she held the other 20randomly selected check numbers for later use. She found no deviations in the sample of 80,a finding that, in the circumstances,…arrow_forward
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