TECHNOLOGICAL INSTITUTE OF THE PHILLIPINES

Aurora Blvd., Quezon City

AUDITING PROBLEM CPA Review

CASH/BANK RECONCILIATION M.C. Cerda, CPA, MBA,RCA
M2018

AUDIT OBJECTIVES & PROCEDURES

Assertions Objectives Procedures

I. Existence or a. Determining whether 1. Obtain analysis of cash

occurrence cash exists at year-end balance & reconcile to
& cash related transac- the general ledger.
tions occur within the 2. Confirm bank balances.
year. 3. Perform cash count of
b. Determine that all cash cash on hand.
balances are reflected 4. Obtain/prepare bank
in the statement at year- reconciliation.
end. 5. Trace all transfers occu-
ring between banks at
year-end.

II. Completeness. c. Determine whether 6. Obtain a cut-off bank

all cash transactions statement. Examine
are recorded in the items returned in the
proper accounting statement.
period. 7. Prepare proof of cash.
8. Verify client’s cut-off
of receipts & disburse-
ments.

III. Rights and d. Determine restrictions 9. Review bank statement

obligations on cash, & whether and bank confirmation
restrictions are indica- replies.
ted in the statement.

IV. Valuation & e. Determine if cash tran- 10.Verify existence of cash

Allocation sactions are recorded in closed banks, cash
& in proper amount. subject to court restrai-
ning order, foreign
currency deposits.

V. Presentation & f. Determine whether cash 11. Investigate checks

disclosure items are presented in representing large or
accordance with the or unusual payments
standards. to related parties.
12. Evaluate proper f/s
presentation & needed
disclosures.
PROBLEM 1

In connection with your audit of the financial statements of Artemius Corporation

for the year ended 12/31/2017, you conducted a surprise count of the company’s
petty cash and undeposited collections at 8:30AM on January 3, 2018. Your
audit disclosed the following:

Bills: Coins:
P100 10 pieces P5.00 36 pieces
50 80 pieces 1.00 428 pieces
20 96 pieces

Checks:
Date Payee Maker Amount
12/302017 Cash PCF Custodian P 2,400
12/30/2017 Artemius Corp. RBS Inc. 28,000
12/31/2017 Artemius Corp. J. Cuz, sales manager 3,360
12/31/2017 Artemius Corp. KJH Corp. 35,600
12/31/2017 Artemius Corp. Loren Corp. 16,600
12/31/2017 FHM Inc.
( not endorsed ) Artemius Corp. 54,000

Unreimbursed vouchers:
Date Payee Description Amount
12/22/2017 J. Cuz, sales mgr. Advance – trip to Baguio P 40,000
12/28/2017 Central Post Office Postage stamps 3,240
12/29/2017 Messengers Travelling expense 300
12/29/2017 Megabyte Inc. Computer repair 1.600

Postage stamps unused . . . . . . . P730

=====
Other items found inside the cash box:
 Unclaimed pay envelope of John Morillo, an employee. Indicated on the
pay slip is his net salary of P15,000. Your inquiry revealed that John’s
salary is mingled with the petty cash fund.
 J. Cruz, the sales manager, presented his liquidation report for his trip to
Baguio City:
Advance received on 12/22/2017 P40,000
Less: Hotel accommodations, meals, etc. P32,000
Bus fare for two 2,400
Cash given to Peter, salesman 2,000 36,400
Balance P 3,600*
=======
Accounted for as follows:
Cash returned by Peter to the sales manager P 240
Personal check of the sales manager 3,360
Total P 3,600
=======
Additional information:
 The custodian is not authorized to cash checks.
 The last official receipt included in the deposit on December 30, 2017 is
no. 351 and the last official receipt issued for the current year is no.355.
The following official receipts are all dated December 31, 2017:
OR No. Amount Form of Payment OR No. Amount Form of Payment
352 P27,200 Cash 354 P 7,200 Cash
353 35,600 Check 355 16,600 Check
 The PCF per ledger is P50,000. Last replenishment date, 12/22/2017.
DETERMINE:
1. Amount of shortage due to the sales manager.
2. Undeposited collections on 12/31/20917.
3. Total unreimbursed vouchers on January 3, 2018.
4. The total amount of cash shortage.
5. Amount of travelling expense on account of the liquidation report of the
sales manager.

PROBLEM 2

Mahogany Company was organized on January 2,2017, The following items are
from the company’s trial balance on 12/31/2017:

Merchandise inventory P 138,000

Accounts receivable 330,800
Land 2,000,000
Building 2,800,000
Furniture & fixtures 734,000
Accounts payable 779,300
Notes payable – bank 1,000,000
Ordinary share capital 3,000,000
Share premium 300,000
Sales 12,470,400
Operating expenses, including depreciation
of P800,000 2,010,300

Additional information:
 Deposit in transit, December 31, 2017, P769,320.
 Service charge for December, 2017, P4,000.
 Outstanding checks, December 31, 2017, P950,000.
 Bank balance, December 31, 2017, P1,784,000.
 Mahogany’s mark-up on sales is 30%..

DETERMINE:
1. Total collections from sales.
2. Total payments for merchandise purchases.
3. Total cash receipts per books.
4. Total cash disbursements per books.
5. Cash balance per books on 12/31/2017.
6. Adjusted cash balance on 12/31/2017.

PROBLEM 3

Sweet Homes Company’s check register shows the following entries for the
month of December:

Date Checks Deposits Balance

12/01/2017 Beginning Balance P178,600
12/05/2017 Deposit P130,000 308,600
12/07/2017 Check No,344 P65,000 241,600
12/11/2017 Check no.345 28,000 213,600
12/26/2017 Deposit 98,000 311,600
12/29/2017 Check No.346 17,200 294,400
The company’s bank reconciliation for November showed an outstanding check
for P24,000 ( Check no. 343, written on Nov. 28, 2017) and a deposit in transit oi
P11,100 made on November 29, 2017.

The following data were reflected in the company’s bank statement for
December, 2017:
Date Checks Deposits
Balance
12/01/2017 Beginning Balance P 191,500
12/01/2017 Deposit P 11,100 202,600
12/04/2017 Check no. 344 P65,000 137,600
12/05/2017 Deposit 112,000 249,600
12/14/2017 Check No. 345 28,000 221,600
12/15/2017 Loan proceeds 1,000,000 1,221,600

12/20/2017 NSF check 15,200 1,206,400

12/29/2017 Service charge 2,000 1,204,400
12/31/2017 Interest 7,200 1,211,600

DETERMINE:
1. Adjusted cash balance at 11/30/2017.
2. Outstanding checks at 12/31/2017.
3. Deposit in transit at 12/31/2017.
4. Total bank receipts in December, 2017.
5. Adjusted cash balance at 12/31/2017.

PROBLEM 4

Resorts Inc. has a current account in BDO. Your audit of the company’s account
reveals the following:

 Balance taken from the company’s general ledger:

Cash balance, Nov. 30, 2017 P1,275,720
Cash balance, December 31, 2017 1,152,840
Receipts, December 1 – 31, 2017 612,440
 Balances taken from the December , 2017 bank statement:
Bank balance, Nov. 30, 2017 1,370,360
Bank balance, Dec. 31, 2017 1,274,440
Disbursements ( debits ) 712,160
 Outstanding checks, Nov. 30, 2017 ( P52,280 was paid
by bank in December, 2017 128,280
 Checks written and recorded in December, 2017, not
included in the checks returned with the bank statement 72,160
 Deposit in transit, Nov. 30, 2017 30,520
 Deposit in transit, Dec. 31, 2017 32,280
 A bank credit was issued in December to correct an erroneous
charge made in November 3,000
 Note collected by bank in December ( company not
informed of the collection ) 4,120
 A check for P4,040 ( payable to a supplier ) was recorded in
December check register as P6,000.
 A check for P4,480 was charged by the bank as P4,840 in December.
 Resorts issued a stop payment order to the bank in December. This
pertains to a check written in December which was not received by the
payee. A new check was written and recorded in the check register in
December. The old check was written off by a journal entry also in
December. 1,560
  Bank service charges, Nov. 30, 2017 120
DETERMINE:
1. Total book disbursements in December.
2. Total bank receipts in December.
3. Total outstanding checks, 12/31/2017.
4. Adjusted cash balance, 11/30/2017.
5. Adjusted book receipts, in December.
6. Adjusted bank disbursements in December.
7. Adjusted book balance, 12/31/2017.

PROBLEM 5

In your examination of the cash account of Andromeda Corporation for the

current year, you obtained directly the company’s bank statement of January 15,
2018 from the bank. The bank statements for November and December were
obtained by the company from the bank. You found out there are no errors in
additions or subtractions in the client’s books. The following additional data are
available from the records:
Nov. 30, 2017 Dec. 31, 2017
Balance, bank statement P688,840 P550,040
Balance, company’s ledger 542,520 452,020
Deposit in transit 70,000 ?
Outstanding checks 176,480 ?

Dec.31, 2017 Jan. 15, 2018

Total bank credits P1,882,020 P642,980
Total bank debits 2,020,820 460,360
Total book credits to cash account 2,016,960 355,140
Total book debits to cash account 1,926,460 585,000

The following information were also obtained:

a. Check No. 84 for P680 cleared by the bank in December as P2,680. This
was found in proving the bank statement. The bank made the correction
on January 10, 2018.
b. The following checks from Andromeda’s customers were returned by the
bank oin various dates and company’s records revealed the following:
- From customer A, P6,540, returned by bank December 7, not recorded
by the company in December, redeposited on December 8.
- From customer B, P13,460, returned by bank December 28, recorded
by the company on January 4, redeposited on January 6.
c. A customer’s note, P40,000, sent by Andromeda to the bank for collection
on November 20, 2017, was collected and credited by the bank to
Andromeda’s account on November 22, 2017, net of bank charge of P160.
The note was recorded by Andromeda in its receipts of December, 2017,
with the bank charge entered among its disbursements.
d. Two payroll checks for employees on vacations totaling P11,000 were
drawn on January 4, 2018 and cleared the bank on January 9, 2018.
These checks were not entered in the client records because semi-
monthly payroll summaries are entered only on the 15 th and 30th day of
each month.

DETERMINE:
1. Deposit in transit as of December 31, 2017.
2. Deposit in transit as of January 15, 2018.
3. Outstanding checks as of December 31, 2017.
4. Outstanding checks as of January 15, 2018.
PROBLEM 6

Vienna Company has weak internal control over its cash transactions. Facts
about its cash position at November 30, 2017 were as follows:

 The cash book showed a balance of P189,016, which included

undeposited receipts. A credit of P1,000 on the bank’s records did not
appear on the books of the company. The balance per bank statement
was P155,500. Outstanding checks were no. 420 for P1,162, no. 422 for
P1,500, no. 430 for P2,532, no. 621 for P1,908, no. 623 for P2,068, & no.
632 for P1,452.

 The cashier stole all undeposited receipts in excess of P37,944, and

prepared the following bank reconciliation:

Balance per books, 11/30/2017 P189,016

Add: Outstanding checks
No. 621 P1,908
623 2,068
632 1,452 4,428
P193,444
Less: Undeposited receipts 37,944
Balance per bank, 11/20/2017 P 155,500
Less: Unrecorded credit 1,000
True cash, 11/30/2017 P 154,500
========
QUESTIONS:

1. The correct amount of cash that should be on hand for deposit on

11/30/2017 is:
A. 37,944 B. 44,138 C. 45,138 D. 46,138

2. The amount stolen by the cashier is:

A. 0 B. 6,194 C. 7,194 D. 8,194

3. The adjusted cash balance at 11/30/2017 is:

A. 175,628 B. 182,822 C. 188,016 D. 190,016

4. The cashier attempted to conceal the theft by:

I. Not listing all outstanding checks.
II. Under-footing outstanding checks shown in the reconciliation.
III. Adding an item in the book balance that should be deducted.

A. I & II only C. II & III only

B. I & III only D. I, II, & III

5. From the information given, which of the following internal control

deficiencies allowed the cashier to be able to conceal the theft?
A. The cashier also prepares the bank reconciliation.
B. No one other than the cashier is responsible for tracing cash receipts
to the deposits in the bank.
C. Both A & B.
D. Neither A nor B.
PROBLEM 7

You were able to obtain the following information in connection with your audit of
the Cash account of the Ireland Company as of December 31, 2017:
November 30 December 31
a. Balances per bank P742,800 P774,696
b. Balances per books 619,304 670,392
c. Outstanding checks 254,096 300,184

d. The bank statement for the month of December showed total credits of
P5,401,800 while the cash receipts per books totaled P9,341,780.

e. NSF checks are recorded as a reduction of cash receipts. NSF checks

which are later re-deposited are then recorded as regular receipts. Data
regarding NSF checks are as follows:
1. Returned by the bank in November and recorded by the company in
December, P1,000.
2. Returned by the bank in December and recorded by the company in
December, P25,000.
3. Returned by the bank in December and recorded by the company in
January, P9,200.

f. Check of Island Company amounting to P9,292 was charged to Ireland’s

account by the bank in error on December 31.

g. A bank memo stated that the company’s account was credited for the net
proceeds of a company’s customer note for P8,060. This is not yet
recorded on the books.

h. The company has hypothecated its accounts receivable with the bank under
an agreement whereby the bank lends the company 80% of the
hypothecated accounts receivable. The company performs accounting and
collection of the accounts. Adjustments of the loan are made from daily
sales reports and deposits.

i. The bank credits the company account and increases the amount of the
loan for 80% of the reported sales. The loan agreement states specifically
that the sales report must be accepted by the bank before the company is
credited. Sales reports are forwarded by the company to the bank on the
first day following the date of sale. The bank allocates each deposit 80% to
the payment of the loan, and 20% to the company account. Thus, only 80%
of each day’s sales and 20% of each collection deposits are entered on the
bank statement. The company accountant records the hypothecation of
new accounts receivable (80% of sales) as a debit to Cash and a credit to
the bank loan as of the date of sales. One hundred percent of the collection
on accounts receivable is recorded as a cash receipt; 80% of the collection
is recorded in the cash disbursements books as a payment on the loan. In
connection with the hypothecation, the following facts were determined:
 Included in the undeposited collections is cash from the hypothecation of
accounts receivable. Sales were P162,000 on November 30, and
P169,000 at December 31, the balance was made up of from collections
of P128,440 which was entered on the books in the manner indicated
above.
 Collections on accounts receivable deposited in December, other than
deposits in transit, totaled P4,800,000.

j. Interest on the bank loan for the month of December charged by the bank
 but not recorded in the books, amounted to P24,
QUESTIONS:
1. The adjusted cash balance as of November 30, 2017 is:
A. 618,304 B. 514,624 C. 488,704 D. 359,104
2. The adjusted book receipts for December, 2017 is:
A. P5,427,488 B. 9,370,240 C. 9,505,440 D. 9,350,260
3. The adjusted book disbursements for December, 2017 is:
A. 9,255,992 B. 9,246,700 C. 9,349,452 D. 5,406,700
4. The adjusted cash balance as of December 31, 2017 is:
A. 509,492 B. 612,244 C. 602,952 D. 636,804
5. The cash shortage as of December 31, 2017 is:
A. 19,980 B. 20,550 C. 97,200 D. 0

PROBLEM 8
In your audit of Cuevas Company’s cash account as of December 31, 2017, you
ascertained the following information:

The bookkeeper’s bank reconciliation on November 30, 2017, is as follows:

Balance per bank statement, November 30, 2017 P24,298

Add: Deposit in transit 3,648
Total P27,946
Less: Outstanding checks
No. 3408 P 440
3413 300
3414 6,820
3416 3,924
3417 800 12,284
Balance P15,662

P15,662
Add: Bank service charge, November 36*
36*
Balance per books P15,698
=======
 Entered in check register in December

The cash receipts journal shows total receipts for December, 2017 of P371,766.
the check register reflects total checks issued in December of P377,632. A
collection of P5,912 was recorded in the company’s books on December 31 but
was not deposited until January 2, 2018.The balance per bank statement at
December 31, 2017 is P17,516. This statement shows total receipts of
P373,502 and checks paid of P380,284.

Your examination revealed the following additional information:

 Check No. 3413 dated November 24, 2017 was entered in the check
register as P300. Your examination of the paid checks returned with
the bank statement reveals that the amount of the check is P30.

 Check No. 3417 was mutilated and returned by the payee. A

 replacement check, check no. 3453, was issued. Both checks were
entered in the check register but no entry was made to cancel check
no. 3417.

 The December 2017 bank statement includes an erroneous bank

charge of P480.

 On January 3, 2018, the bank informed your client that a December

2017r bank charge of P42 was omitted from the statement.
 Your examination of the bank credit memo accompanying the
December bank statement discloses that it represents proceeds from
the note collected in December of P4,000.

 The outstanding checks at December 31, 2017 are as follows:

No. 3408 P440 No. 3418 P2,814
3417 800 3419 5,788

QUESTIONS:
1. Total book disbursements for the month of December, 2017 is:
A. 377,596 B. 377,632 C. 377,668 D. 377,710
2. Book balance at December 31, 2017 is:
A. 9,754 B. 9,796 C. 9,832 D. 9,868
3. Total outstanding checks at December, 2017 is:
A. 8,602 B. 9,042 C. 9,072 D. 9,842
4. Adjusted bank balance at November, 2017 is:
A. 16,690 B. 16,732 C. 16,774 D. 16,804
5. Adjusted book receipts for the month of December, 2017 is:
A. 371,238 B. 371,766 C. 375,724 D. 375,766
6. Adjusted book disbursements for the month of December, 2017 is:
A. 377,590 B. 377,632 C. 377,662 D. 377,674
7. Adjusted book balance at December 31, 2017 is:
A. 14,782 B. 14,824 C. 14,866 D. 14,908

PROBLEM 9

You have been asked by the proprietor of Athena Company to verify the
accountability of the cashier-bookkeeper, who was allowed to take a vacation
leave a few days ago.
 The bank reconciliation statements prepared by the cashier-bookkeeper
are presented below:

November 30, 2017

Balance per bank statement P43,000
Cash on hand 1,000
Total P44,000
Outstanding checks:
No.2520 P 4,000
2521 2,800
2522 3,800 ( 6,600 )
Erroneous bank charge 4,000
Erroneous bank credit ( 1,000 )
Balance per books P40,400
=======
December 31, 2017
Balance per bank statement P270,000
Cash on hand 12,600
Total P282,600
 Outstanding checks:
No.2674 P62,000
2675 20,600
2676 10,000 ( 82,600 )
Erroneous bank charge 6,000
Erroneous bank credit ( 1,200 )
Balance per books P204,800
========
 The cash-in-bank account in the general ledger shows the following
recorded entries during December.

Debits Credits
Dec. 1 Balance P40,400 Dec.1 Checks issued P 4,000
2 From customers 9,000 5 Checks issued 10,400
7 From customers 10,000 14 Checks issued 62,000
12 From customers 40,000 24 Checks issued 92,000
17 From customers 60,000 28 Checks issued 15,200
23 From customers 18,000 Totals P191,600
27 From customers 140,000
31 From customers 97,000
Totals P396,400

* The following summarized transactions were taken from the bank

statement for the month of December 31, 2017:

Balance, December 1, 2017 P 33,000

Total deposits 347,400
These include:
Collection of notes receivable P10,000
Correction of November erroneous bank charge 4,000
Dec. 10 deposit of Lava Inc. credited in error to
account of Athena 1,200
Total checks 130,400
These include:
Correction of November erroneous bank credit P1,000
December check of Nile Company charged in
error to account of Athena 6,000

 Cash on hand per count in the morning of January 2, 2018 amounted to

P12,600.

 Before leaving the company for a one-week vacation, the proprietor had
left several signed blank checks that the cashier-bookkeeper had cashed
for his personal use.

QUESTIONS:
1. The adjusted cash balance on November 30, 2017 is:
A. 26,400 B. 29,000 C. 33,000 D. 40,400
2. The amount of unaccounted receipts in December is:
A. 18,000 B. 22,000 C. 26,400 D. 30,200
3. The amount of unrecorded/unsupported disbursements in December is:
A. 10,000 B. 14,000 C. 21,800 D. 30,200
4. The total cash shortage as of December 31, 2017 is:
A. 14,000 B. 30,200 C. 52,000 D. 66,000
5. The adjusted cash balance on December 31, 2017 is:
A. 174,800 B. 204,800 C. 222,800 D. 250,000
SUBSTANTIVE TEST QUESTIONS
1. What is the effect of not replenishing the petty cash fund at year-end and not
making the appropriate adjusting entry?
a. A detailed audit is necessary.
b. The petty cash custodian should turn over the petty cash to the general
cashier.
c. Cash will be overstated and expenses understated.
d. Expenses will be overstated and cash will be understated.

2. Normally, the audit objective of valuation is of minimum concern during the

audit of cash. However, the auditor’s concern about the valuation objective
would most likely increase when
a. The client uses a demand deposit account.
b. The proof of cash cannot be reconciled.
c. The client has foreign currency accounts.
d. Both currency and negotiable securities are on hand

3. The primary purpose of sending a standard confirmation request to financial

institutions with which the client has done business during the year is to.
a. Provide the data necessary to prepare a proof of cash.
b. Request information about contingent liabilities and secured transactions.
c. Detect kiting activities that may otherwise not be discovered.
d. Corroborate information regarding deposit and loan balances.

4. The auditor should ordinarily mail confirmation requests to all banks with
which the client has conducted any business during the year, regardless of
the year-end balance, since
a. The mailing of confirmation forms to all such banks is required by GAAS.
b. This procedure relieves the auditor of any responsibility with respect to
non-detection of forged checks.
c. The confirmation form also seeks information about indebtedness to the
bank.
d. This procedure will detect kiting activities which otherwise not be detected.
5. The standard bank confirmation form requests all of the following except
a. Description of collateral for a direct liability.
b. The interest rate of a direct liability.
c. Maturity date of a direct liability.
d. The principal amount paid for a direct liability.
6. As one of the year-end audit procedures, the auditor instructed the client’s
personnel to prepare a standard bank confirmation request for a bank
account that had been closed during the year. After the client’s treasurer had
signed the request, it was mailed by the assistant treasurer. What is the
major flaw in this audit procedure?
a. The request was mailed by the assistant treasurer.
b. The CPA did not sign the confirmation request before it was mailed.
c. The confirmation request was signed by the treasurer.
d. Sending the request was meaningless because the account was closed
before year-end.
7. An auditor who is engaged to examine the financial statements of a business
enterprise will request cutoff bank statement primarily in order to
a. Detect lapping.
b. Detect kiting.
c. Verify the cash balance reported on the bank confirmation inquiry form.
d. Verify reconciling items on the client’s bank reconciliation.
8. On receiving the bank cutoff statement, the auditor should trace
a. Deposits listed on the cutoff statement to deposits in the cash receipts
journal.
b. Checks dated subsequent to year-end to the outstanding checks listed on
the year-end bank reconciliation.
c. Deposits in transit on the year-end bank reconciliation to deposits in the
cash receipts journal.
d. Checks dated prior to year-end to the outstanding checks listed on the
year-end bank reconciliation.

9. An unrecorded check is issued during the last week of the year would most
likely be discovered by the auditor when
a. Bank confirmation is reviewed.
b. Search for unrecorded liabilities is performed.
c. Check register for the last month is reviewed.
d. Cutoff bank statement is reconciled.

10. To gather evidence regarding the balance per bank in a bank reconciliation,
an auditor would examine all of the following except
a. Cutoff bank statement c. Bank confirmation
b. Year-end bank statement d. General ledger

11. An auditor compares information on cancelled checks with information

contained in the cash disbursement journal. The objective of this test is to
determine that
a. Cash disbursements are for goods and services actually received.
b. No discrepancies exist between the data on the checks and the data in the
journal.
c. Recorded cash disbursement transactions are properly authorized.
d. Proper cash purchase discounts have been recorded.

12. An auditor should trace bank transfers for the last part of the audit period and
for the first part of the subsequent period to detect whether
a. Cash balances were overstated because of kiting.
b. Any unusual payments to or receipts from related parties occurred.
c. The cash receipts journal was held open for a few days after the year-end.
d. The last checks recorded before the year-end were actually mailed by the
year-end.
13. Which of the following is one of the better auditing techniques that might be
used by an auditor to detect kiting?
a. Prepare a schedule of bank transfers.
b. Prepare year-end bank reconciliation.
c. Review the composition of authenticated deposit slips.
d. Review subsequent bank statements received directly from the banks.
14. Kiting is a technique that might be used to conceal cash shortage. The
auditor can best detect kiting by performing which of the following
procedures?
a. Examining paid checks returned with bank statements subsequent to the
f/s date.
 b. Comparing year-end balances per the standard bank confirmation forms
with the like balances on the client’s bank reconciliations.
c. Examining the details of deposits made to all bank accounts several days
subsequent to the f/s date.
d. Comparing cash receipts records with details on authenticated bank
deposit slips for dates subsequent to the f/s date.
15. A cash shortage may be concealed by transporting funds from one location to
another or by converting negotiable assets to cash. Because of this, which of
the following is vital?
a. Simultaneous confirmations c. Simultaneous verifications
b. Simultaneous bank reconciliations d. Simultaneous cash count

16.Which of the following is considered a working paper in the audit of

company’s bank accounts?:
a. Cash count sheet. c. Bank reconciliation.
b. Bank confirmation letter. d. Lapsing schedule.

17.These are considered incompatible functions in relation to control measures

for cash items:
a. Cash receipt and authority to deposit cash to depository banks.
b. Cash receipt and recordkeeping for cash transactions.
c. Bank reconciliation performed by persons other than the cashier.
d. Petty cash fund custodian requiring duly approved PCVs prior to its
payment.

18. A fraud on cash involving delay of recording of receipt from one customer to
be cover up by a receipt from another customer;
a. Window dressing c. Lapping
b. Kiting d. Any of the given

19. Garnished bank accounts of the company are presented in the f/s as;
a. Part of cash account.
b. Part of cash account, with adequate disclosure.
c. Part of cash account, without disclosure.
d. Non-current asset, with adequate disclosure.

20. To establish control of disbursements on company’s bank accounts,

authorized signatories for any checks issued to the bank accounts;
a. At all times be signed the company president.
b. At all times be countersigned by the company’s accountant. .
c. Must at least two of the designated authorized signatories.
d. May be any one of the designated authorized signatories.