Chapter 16 Assignment Questions Flashcards
A cheque was omitted from the outstanding cheque list on the June 30 bank reconciliation. It cleared the bank July 7.
State the most likely motivation of the person responsible.
To cover a shortage.
A cheque was omitted from the outstanding cheque list on the June 30 bank reconciliation. It cleared the bank July 7.
What control could be instituted to reduce the likelihood of occurrence?
Internal verification of bank reconciliation.
A cheque was omitted from the outstanding cheque list on the June 30 bank reconciliation. It cleared the bank July 7.
List an audit procedure to use to discover each misstatement.
Trace all cheques in the cut-off bank statement to the outstanding list.
A cheque was omitted from the outstanding cheque list on the bank reconciliation. It cleared the bank September 6.
State the most likely motivation of the person responsible.
To cover a shortage.
A cheque was omitted from the outstanding cheque list on the bank reconciliation. It cleared the bank September 6.
What control could be instituted to reduce the likelihood of occurrence?
Internal verification of bank reconciliation.
A cheque was omitted from the outstanding cheque list on the bank reconciliation. It cleared the bank September 6.
List an audit procedure to use to discover each misstatement.
Trace all June 30 outstanding cheques recorded in cash disbursements journal to July 31 bank reconciliation. All uncleared items should be on the outstanding cheque list.
Cash receipts collected on accounts receivable from July 2 to July 5 were included as June 29 and 30 cash receipts.
State the most likely motivation of the person responsible.
Hold open books to improve cash position.
Cash receipts collected on accounts receivable from July 2 to July 5 were included as June 29 and 30 cash receipts.
What control could be instituted to reduce the likelihood of occurrence?
Independent bank reconciliation.
Cash receipts collected on accounts receivable from July 2 to July 5 were included as June 29 and 30 cash receipts.
List an audit procedure to use to discover each misstatement.
Trace deposits in transit to cut-off bank statements to determine deposit date.
A loan from the bank on June 26 was credited directly to the client’s bank account. The loan was not entered in the books as of June 30.
State the most likely motivation of the person responsible.
To cover a cash shortage or to improve the current ratio.
A loan from the bank on June 26 was credited directly to the client’s bank account. The loan was not entered in the books as of June 30.
What control could be instituted to reduce the likelihood of occurrence?
Independent bank reconciliation.
A loan from the bank on June 26 was credited directly to the client’s bank account. The loan was not entered in the books as of June 30.
List an audit procedure to use to discover each misstatement.
Obtain bank confirmation.
A cheque that was dated June 26 and disbursed in June was not recorded in the cash disbursements journal, but it was included as an outstanding cheque on June 30.
State the most likely motivation of the person responsible.
Original cheque was unauthorized and illegal. Outstanding cheque made the bank reconcile.
A cheque that was dated June 26 and disbursed in June was not recorded in the cash disbursements journal, but it was included as an outstanding cheque on June 30.
What control could be instituted to reduce the likelihood of occurrence?
Internal verification of bank reconciliation, including accounting for all cheques recorded in the cash disbursements journal as cleared or still outstanding.
A cheque that was dated June 26 and disbursed in June was not recorded in the cash disbursements journal, but it was included as an outstanding cheque on June 30.
List an audit procedure to use to discover each misstatement.
Verify the bank reconciliation, including cash disbursements for all material uncleared outstanding cheques.
