ACCY 131 EXAM 3 UPDATED ACTUAL QUESTIONS
AND CORRECT ANSWERS
Question:
1. Which of the following is not a control that generally is
established over cash transactions?
A. Separating cash handling from recordkeeping.
B. Centralizing the receipt of cash.
C. Depositing each day's receipts intact.
D. Obtaining a receipt for every disbursement.
Answer:
D. Obtaining a receipt for every disbursement.
Question:
2. To gather evidence regarding the balance per bank in a
bank reconciliation, an auditor could examine all of the
following except:
A. Bank confirmation.
B. General ledger.
C. Cutoff bank statement.
D. Year-end bank statement.
Answer:
B. General ledger.
Question:
3. Kiting would least likely be detected by:
A. Preparing a four-column bank reconciliation for all
major cash accounts.
B. Comparing customer remittance advices with
recorded disbursements in the cash disbursements
journal.
C. Preparing a schedule of interbank transfers by using
the client's records and bank statements around year-
end.
D. Analyzing details of large cash deposits around year-
end.
Answer:
B. Comparing customer remittance advices with recorded disbursements in the
cash disbursements journal.
,Question:
4. Which of the following cash transfers is most likely to
result in a misstatement of cash at December 31, 20X7?
Bank Transfer Schedule
Disbursement:
Recorded in books
Paid by bank
Receipt:
Recorded in books
Received by bank
A) 12/31/X7 1/4/X8 12/31/X7 12/31/X7
B) 1/4/X8 1/5/X8 12/31/X7 1/4/X8
C) 12/31/X7 1/5/X8 12/31/X7 1/4/X8
D) 1/4/X8 1/11/X8 1/4/X8 1/4/X8
Answer:
B) 1/4/X8 1/5/X8 12/31/X7 1/4/X8
Question:
5. Which of the following could not be more efficiently
performed with data analytics?
Answer:
C. Identification of an unrecorded cash deposit.
Question:
6. A. Identification of cash recorded from an unusual
accounting source.
B. Identification of unusual expense reimbursements.
C. Identification of an unrecorded cash deposit.
D. Identification of possible duplicate payments.
Answer:
Question:
7. The Standard Form to Confirm Account Balances with
Financial Institutions includes information on all of the
following except:
A. The interest rate of a direct liability.
B. Date due of a direct liability.
C. Description of collateral for a direct liability.
D. The principal amount paid on a direct liability.
Answer:
D. The principal amount paid on a direct liability.
,Question:
8. 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:
A. Count the cash in advance of the balance sheet date in
order to disclose any kiting operations at year-end.
B. Coordinate the count of cash with the cutoff of
accounts payable.
C. Coordinate the count of cash with the count of
marketable securities and other negotiable assets.
D. Count the cash immediately upo
Answer:
C. Coordinate the count of cash with the count of marketable securities and other
negotiable assets.
Question:
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?
Answer:
B. Require that the safekeeping function for securities be assigned to a bank or
stockbroker that will act as a custodial agent.
Question:
10. A. Require that one trustworthy and bonded employee
be responsible for access to the safekeeping area where
securities are kept.
B. Require that the safekeeping function for securities be
assigned to a bank or stockbroker that will act as a
custodial agent.
C. Require that em
Answer:
, Question:
11. Garcia was engaged to audit the financial statements of
Delta Corporation for the year ended September 30,
20X0. Having completed an examination of the
investment securities, which of the following is the best
method of verifying the accuracy of recorded dividend
income?
A. Tracing recorded dividend income to cash receipts
records and validated deposit slips.
B. Comparing recorded dividends with a standard
financial reporting service's record of dividends.
C. Comparing recorded dividends with
Answer:
B. Comparing recorded dividends with a standard financial reporting service's
record of dividends.
Question:
12. 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?
Answer:
A. Observe the consistency of the employees' use of cash registers and tapes.
Question:
13. A. Observe the consistency of the employees' use of
cash registers and tapes.
B. Inquire about employees' access to recorded but
undeposited cash.
C. Trace deposits in the cash receipts journal to the cash
balance in the general ledger.
D. Compare the cash balance in the general ledger w
Answer:
AND CORRECT ANSWERS
Question:
1. Which of the following is not a control that generally is
established over cash transactions?
A. Separating cash handling from recordkeeping.
B. Centralizing the receipt of cash.
C. Depositing each day's receipts intact.
D. Obtaining a receipt for every disbursement.
Answer:
D. Obtaining a receipt for every disbursement.
Question:
2. To gather evidence regarding the balance per bank in a
bank reconciliation, an auditor could examine all of the
following except:
A. Bank confirmation.
B. General ledger.
C. Cutoff bank statement.
D. Year-end bank statement.
Answer:
B. General ledger.
Question:
3. Kiting would least likely be detected by:
A. Preparing a four-column bank reconciliation for all
major cash accounts.
B. Comparing customer remittance advices with
recorded disbursements in the cash disbursements
journal.
C. Preparing a schedule of interbank transfers by using
the client's records and bank statements around year-
end.
D. Analyzing details of large cash deposits around year-
end.
Answer:
B. Comparing customer remittance advices with recorded disbursements in the
cash disbursements journal.
,Question:
4. Which of the following cash transfers is most likely to
result in a misstatement of cash at December 31, 20X7?
Bank Transfer Schedule
Disbursement:
Recorded in books
Paid by bank
Receipt:
Recorded in books
Received by bank
A) 12/31/X7 1/4/X8 12/31/X7 12/31/X7
B) 1/4/X8 1/5/X8 12/31/X7 1/4/X8
C) 12/31/X7 1/5/X8 12/31/X7 1/4/X8
D) 1/4/X8 1/11/X8 1/4/X8 1/4/X8
Answer:
B) 1/4/X8 1/5/X8 12/31/X7 1/4/X8
Question:
5. Which of the following could not be more efficiently
performed with data analytics?
Answer:
C. Identification of an unrecorded cash deposit.
Question:
6. A. Identification of cash recorded from an unusual
accounting source.
B. Identification of unusual expense reimbursements.
C. Identification of an unrecorded cash deposit.
D. Identification of possible duplicate payments.
Answer:
Question:
7. The Standard Form to Confirm Account Balances with
Financial Institutions includes information on all of the
following except:
A. The interest rate of a direct liability.
B. Date due of a direct liability.
C. Description of collateral for a direct liability.
D. The principal amount paid on a direct liability.
Answer:
D. The principal amount paid on a direct liability.
,Question:
8. 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:
A. Count the cash in advance of the balance sheet date in
order to disclose any kiting operations at year-end.
B. Coordinate the count of cash with the cutoff of
accounts payable.
C. Coordinate the count of cash with the count of
marketable securities and other negotiable assets.
D. Count the cash immediately upo
Answer:
C. Coordinate the count of cash with the count of marketable securities and other
negotiable assets.
Question:
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?
Answer:
B. Require that the safekeeping function for securities be assigned to a bank or
stockbroker that will act as a custodial agent.
Question:
10. A. Require that one trustworthy and bonded employee
be responsible for access to the safekeeping area where
securities are kept.
B. Require that the safekeeping function for securities be
assigned to a bank or stockbroker that will act as a
custodial agent.
C. Require that em
Answer:
, Question:
11. Garcia was engaged to audit the financial statements of
Delta Corporation for the year ended September 30,
20X0. Having completed an examination of the
investment securities, which of the following is the best
method of verifying the accuracy of recorded dividend
income?
A. Tracing recorded dividend income to cash receipts
records and validated deposit slips.
B. Comparing recorded dividends with a standard
financial reporting service's record of dividends.
C. Comparing recorded dividends with
Answer:
B. Comparing recorded dividends with a standard financial reporting service's
record of dividends.
Question:
12. 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?
Answer:
A. Observe the consistency of the employees' use of cash registers and tapes.
Question:
13. A. Observe the consistency of the employees' use of
cash registers and tapes.
B. Inquire about employees' access to recorded but
undeposited cash.
C. Trace deposits in the cash receipts journal to the cash
balance in the general ledger.
D. Compare the cash balance in the general ledger w
Answer:
