, WGU D362 Corporate Finance Chapter
16 Audit Exam Review Questions and
Answers 100% Pass | Graded A+
1. The cash account is affected by all of the entity's business
processes. - Answer>> True
2. The general cash account is generally the principal account
used to disburse payroll. - Answer>> False
3. An imprest cash account is used for specific purposes and
generally maintains a very small balance. - Answer>> True
4. The auditor's use of analytical procedures for auditing cash is
limited. - Answer>> True
5. A major control that directly affects the audit of cash is the bank
reconciliation prepared by the auditor. - Answer>> False
6. A cutoff bank statement is used to verify the propriety of the
reconciling items shown on the bank reconciliation. - Answer>>
True
7. Kiting is an audit procedure used to test the accuracy of the
cash receipts. - Answer>> False
8. It is generally more efficient to follow a substantive strategy for
auditing investments. - Answer>> True
9. If the client maintains custody of its investments, the auditor
normally examines the actual securities - Answer>> True
10. Level 1 inputs are more risky and difficult to audit than Level 3
inputs to a valuation model. - Answer>> False
, 11. Which of the following internal controls most likely would
reduce the risk of diversion of customer receipts by an entity's
employees?
A. A bank lockbox system
B. Prenumbered remittance advices
C. Monthly bank reconciliations
D. Daily deposit of cash receipts - Answer>> A
12. The least crucial element of internal control over cash is
A. Separation of cash record-keeping from custody of cash
B. Preparation of the monthly bank reconciliation
C. Batch processing of checks
D. Separation of cash receipts from cash disbursements -
Answer>> C
13. Which of the following audit procedures is the most
appropriate when internal control over cash is weak or when a
client requests an investigation of cash transactions?
A. Proof of cash
B. Bank reconciliation
C. Cash confirmation
D. Evaluate ratio of cash to current liabilities - Answer>> A
14. An unrecorded check issued during the last week of the year
would most likely be discovered by the auditor when the
A. Check register for the last month is reviewed
B. Cutoff bank statement is reconciled
C. Bank confirmation is reviewed
D. Search for unrecorded liabilities is performed - Answer>> B
15. Which of the following is one of the better auditing techniques
that might be used by an auditor to detect kiting between
intercompany banks?
A. Review the composition of authenticated deposit slips
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