a. To determine whether internal controls are adequate. b. To determine whether client's financing arrangements are effective and efficient. c. To determine whether transactions regarding the principal and interest of notes are properly authorized. d. To determine whether the liability for notes and related interest expense and accrued liabilities are properly stated Question 13: When there are not numerous transactions involving notes payable during the year, the normal starting point for the audit of notes payable is: a. a schedule of notes payable and accrued interest prepared by the audit team. b. a schedule of notes payable and accrued interest obtained from the client. c. a schedule of only those notes with unpaid balances at the end of the year prepared by the client. d. the notes payable account in the general ledger Question 14: A CPA obtains a January 10 cutoff bank statement for a client directly from the bank. Very few of the outstanding checks listed on the client’s December 31 bank reconciliation cleared during the cutoff period. A probable cause for this is that the client a. is engaged in kiting. b. is engaged in lapping. c. has overstated its year-end bank balance. d. transmitted the checks to the payees after year-end
Question 15: Which of the following is one of the better auditing techniques to detect kiting? a. Review composition of authenticated deposit slips. b. Review subsequent bank statements and cancelled checks received directly from the banks. c. Prepare year-end bank reconciliations. d. Prepare a schedule of bank transfers from the client’s books Question 16: An auditor ordinarily sends a standard confirmation request to all banks with which the entity has done business during the year under audit, regardless of the year-end balance. A purpose of this procedure is to a. Provide the data necessary to prepare a proof of cash b.
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- Fall '19