Professional Documents
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Audit of Cash
Audit of Cash
2. On receiving the bank cut off statement, the auditor should trace
a. Deposits in transit on the year-end bank reconciliation to deposits in
the cash receipts journal.
b. Checks dated prior to year-end to the outstanding checks listed on
the year-end bank reconciliation.
c. Deposits listed on the cut off bank statement to deposits in the cash
receipts journal.
d. Checks dated subsequent to year-end to the outstanding checks listed
on the year-end bank reconciliation.
3. An unrecorded check issued during the last week of the year would most
likely be discovered by the auditor when
a. Check register for the last month is reviewed.
b. Cut off bank statement is reconciled.
c. Bank confirmation is reviewed.
d. Search for unrecorded liabilities is performed.
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a. Recorded cash disbursement transactions are properly authorized.
b. Proper cash purchase discounts have been recorded.
c. Cash disbursements are for goods and services actually received.
d. No discrepancies exist between the data on the checks and the data in
the journal.
6. When counting cash on hand, the auditor must exercise control over all
cash and other negotiable assets to prevent
a. Theft c. Substitution
b. Irregular endorsement d. Deposit in Transit
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b. Bank reconciliations.
c. Interbank transfer schedule.
d. Bank deposit lead schedule.
PROBLEMS
Problem 1: The controller of the BSSB CO. is trying to determine the amount
of cash and cash equivalents to be reported on its December 31, 2018,
statement of financial position. The following information is provided:
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Credit memo from a supplier for a purchase return 8,100
Traveler’s check 21,000
Money Order 12,900
Petty cash fund (P3,000 in currency and expense
Receipts for P12,000) 15,000
Problem 3: The auditor for ALESSANDRA, INC examined the petty cash fund
immediately after the close of business, July 31, 2018, the end of the
company’s natural business year. The petty cash custodian presented the
following during the count:
Currency P1,650
Petty cash vouchers:
Postage 420
Office supplies expense 900
Transportation expense 340
Computer repairs 800
Advances to office staff 1,500
A check drawn by ALESSANDRA, INC.,
payable to the petty cash custodian 7,200
Postage stamps 300
An employee check, returned by bank marked NSF 1,000
An envelope containing currency of P1,890 for a gift
For a retiring employee 1,890
P16,000
The general ledger shows an imprest petty cash fund balance of P16,000.
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Problem 4: The bank statement for the checking account of CATRIONA
MAGNAYON GRAY, INC showed a December 31, 2019, balance of P1,463,212.
Information that might be useful in preparing a bank reconciliation is as
follows:
Questions:
1. What is the cash in bank balance per books on December 31, 2019?
a. P1,354,287
b. P1,357,887
c. P1,337,287
d. P1,264,287
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2. What is the corrected cash in bank balance on December 31, 2019?
a. P1,304,787
b. P1,301,187
c. P1,284,187
d. P1,211,187
3. What amount of cash and cash equivalents should be reported in the
current asset section of the balance sheet on December 31, 2019?
a. P1,821,187
b. P2,321,187
c. P1,301,187
d. P1,874,287
Questions:
1. How much is the deposit in transit on December 31,2019?
a. P15,000 b. P67,500 c. P52,500 d. P60,000
2. The total unrecorded bank service charges as of December 31, 2019,
is?
a. P6,750 b. P2,250 c. P5,250 d. P12,750
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3. What is the total book receipts in December?
a. P457,500 b. P465,000 c. P450,000 d. P442,500
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During December, a check was written in payment for consultancy
amounting P36,000 but was recorded on the ledger as P39,000.
Vouchers:
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8. What is the correct Petty Cash Fund balance as of December 31,
2018?
9. What is the amount of cash shortage or overage, if any?
10. Total Credits on the Petty Cash Fund account on December 31,
2018?
4. Same problem as number 3, how much is the expense for 2019 paid
for by the PCF?
a. P14,500 c. P2,200
b. P14,800 d. P1,900