Homework 8th edition Chapter 12

Homework 8th edition Chapter 12 - Multiple Choice...

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Multiple Choice Questions: 12-24. b. 12-25. b. 12-26. c. 12-27. b. 12-28. d. 12-29. d. 12-30. b. 12-31. a. 12-32. b. 12-33. a. 12-34. b. 12-35. c. 12-39. a. The major components of internal control that Fran must be relying on regarding the approach to testing cash would include the following: 1. Adequate segregation of duties between: receipt of cash and deposits of cash receipt of cash and recording of cash recording of cash and independent reconciliation of cash accounts on a timely basis (such as monthly) 2. Implementation of effective computerized control procedures and other application control procedures to help ensure timely and accurate recording of cash. 3. Implementation of good cash management practices by management including: use of cash budgets and cash forecasts comparison of cash receipts with budgets management monitoring of cash and immediate investigation of any cash problems. 4. Periodic internal audit of cash management and control procedures over the handling of cash. 5. Timely bank reconciliations.
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6. Management policies on types of cash accounts and risks the organization can take in transferring cash to earn short-term returns on idle cash. b. Audit Procedures to Corroborate Understanding of Control Risk: 1. Segregation of Duties: Observation of segregation of duties Inquire of procedures used to handle cash Review of bank reconciliations to determine that someone independent of those handling cash performed them promptly. Selection of a sample of cash receipts and disbursements and tracing through the accounts to determine the processing of the transactions and the individuals involved in the processing. 2. Computerized control procedures and other accounting application control procedures: Selection of a sample of transactions (both receipts and disbursements) and tracing them through the system to determine proper authorization and implementation of important application control procedures. Independent testing of computerized application through the use of an Integrated Test Facility, test data, or some comparable computerized audit procedure. 3. Implementation of good cash management practices: Inquire of management as to cash management practices. Review of documents or reports that would provide evidence of the actual implementation of the good practices. Review of internal audit reports on cash management practices. Analytical review of cash accounts on a periodic basis to determine if there is evidence that management anticipates cash transactions and appears to manage them effectively. Review of exception reports and action taken by management based on the
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This note was uploaded on 09/20/2011 for the course ACCT 4420 taught by Professor Franz during the Spring '11 term at Toledo.

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Homework 8th edition Chapter 12 - Multiple Choice...

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