California State University, Stanislaus

ACCOUNTING 4110

Chapter 10:

1)Which of the following controls would most likely reduce the risk of diversion of customer receipts by a client’s employees?

2. To provide assurance that each voucher is submitted and paid only once, the auditors most likely would examine a sample of paid vouchers and determine whether each voucher is:
3. In testing controls over cash disbursements, the auditors most likely would determine that the person who signs checks also:
4. To gather evidence regarding the balance per bank in a bank reconciliation, the auditors would examine any of the following except:
5. You have been assigned to the year-end audit of a financial institution and are planning the timing of audit procedures relating to cash. You decide that it would be preferable to:
6. Which of the following procedures would the auditors most likely perform to test controls relating to management’s assertion about the completeness of cash receipts for cash sales at a retail outlet?
7. Reconciliation of the bank account should not be performed by an individual who also:
8. The auditors suspect that a client’s cashier is misappropriating cash receipts for personal use by lapping customer checks received in the mail. In attempting to uncover this embezzlement scheme, the auditors most likely would compare the:
9. In order to guard against the misappropriation of company-owned marketable securities, which of the following is the best course of action that can be taken by a company with a large portfolio of marketable securities?
10. Hall Company had large amounts of funds to invest on a temporary basis. The board of directors decided to purchase securities and derivatives and assigned the future purchase and sale decisions to a responsible financial executive. The best person or persons to make periodic reviews of the investment activity would be:

11. The auditors who physically examine securities should insist that a client representative be present in order to:
12. The best way to verify the amounts of dividend revenue received during the year is:
13. Items a through l represent possible errors and fraud that you suspect may be present at Rex Company. The accompanying List of Auditing Procedures represents procedures that the auditor would consider performing to gather evidence concerning possible errors and fraud. For each item, select one or two procedures, as indicated, that the auditor most likely would perform to gather evidence in support of that item. The procedures on the list may be selected once, more than once, or not at all.

14. During your audit of Carla Pang Inc., you prepared the following bank transfer schedule.

Fill out the table below indicating the most likely situation as it relates to cash at year-end. Indicate the situation using one of the following:

1. Year-end total cash is properly stated.
2. Year-end total cash is understated.
3. Year-end total cash is overstated.