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Unformatted text preview: CHAPTER 23 Multiple-Choice Questions 1. easy c Which of the following misstatements is most likely to be uncovered during an audit of a clients bank reconciliation? a. Duplicate payment of a vendors invoice. b. Billing a customer at a lower price than indicated by company policy. c. Failure to record a collection of a note receivable by the bank on the clients behalf. d. Payment to an employee for more than the hours actually worked. 2. easy a Which of the following is the focus of an audit of cash for most companies? a. General cash account. b. Payroll cash account. c. Petty cash account. d. Money market account. 3. easy c The test of details of balances procedure that requires the auditor to foot the outstanding check list and deposits in transit is an attempt to satisfy which audit objective? a. Cutoff. b. Presentation and disclosure. c. Detail tie-in. d. Completeness. 4. easy b Which of the following cycles does not affect cash in bank? a. Capital acquisitions cycle. b. Inventory and warehousing. c. Payroll and personnel cycle. d. Acquisitions and disbursements. 5. easy c The audit objective of determining that cash in bank, as stated on the reconciliation, foots correctly and agrees with the general ledger can be tested by which of the following procedures? a. Performing tests for kiting. b. Receiving and testing a cutoff bank statement. c. Footing the outstanding checks list and the list of deposits in transit. d. Examining the minutes of the board of directors for restrictions on the use of cash. 6. easy a The test of balances procedure that requires the auditor to trace the book balance on the reconciliation to the general ledger is an attempt to satisfy the audit objective of a. detail tie-in. b. existence. c. completeness. d. accuracy. 7. easy d Which of the following statements is correct? a. Auditors must obtain bank confirmations on every audit. b. Auditors obtain bank confirmations at their discretion. c. Auditing standards do not address specific requirements regarding bank confirmations. d. Auditing standards do not require bank confirmations except when there is an unusually large number of inactive bank accounts. 23-1 8. easy c A partial-period bank statement and the related canceled checks, duplicate deposit slips, and other documents included in bank statements, mailed by the bank directly to the CPA firms office, is called a. a four-column proof of cash. b. a year-end bank statement. c. a cutoff bank statement. d. a short-period bank statement. 9. easy d When the auditor believes the year-end bank reconciliation may be intentionally misstated, it is appropriate to perform extended tests of the year-end bank reconciliation. Assuming the client has a December 31 year-end, these extended tests would include a. comparing all November 30 reconciling items with canceled checks and other documents in the December bank statement....
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- Spring '11