Cash and Cash Equivalent

Which of the following is the focus of an audit of cash for most companies?

• General cash account

• Payroll cash account

Which of the following items on a bank reconciliation would require an adjusting entry on the company’s books?

• An error by the bank

• A bank service charge

Which of the following is not a “cash equivalent”?

• Time deposits

• Marketable securities

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?

• Performing tests for kiting

• Footing the outstanding checks list and the list of deposits in transit

Which of the following is a cash equivalent?

• Sertificates of deposit

• Notes payable

An auditor performs a proof of cash to verify that:

• All deposits in the bank were recorded in the accounting records

• All recorded cash disbursements were paid by the bank

• All recorded cash receipts were deposited

• All of the above

The following are the common controls over cash except...

• Segregation of duties

• Computerized control totals and edits tests

• Perform an overall estimate of depreciation expense

• Independent bank reconciliations by employees who do not handle cash

The auditor should ordinarily send confirmation requests to all banks with which the client has conducted any business during the year, regardless of the year balance, because...

• This procedure will detect kiting activities that would otherwise not be detected

• The confirmation form also seeks information about indebtedness to the bank

• The sending of confirmation requests to all such banks is required by auditing

  standards

• This procedure relieves the auditor of any responsibility with respect to non detection

  of forged checks

Which of the following is not a basic characteristic of a system of cash control?

• Use of a voucher system

• Combined responsibility for handling and recording cash

Which of the following cycles does not affect cash in bank?

• Capital acquisitions cycle

• Inventory and warehousing