Foot The Outstanding Check List and Deposits in Transit

While performing an audit of cash, an auditor Which of the following is the most effective audit
begins to suspect kiting. Which of the following is procedures for verification of dividends earned on
the best evidence that the auditor could obtain investments in equity securities?
concerning whether kiting is taking place? Reconciling amounts received with published
Evidence obtained by preparing a schedule of dividend records.
interbank transfers.
In confirming with an outside agent, such as a
The following controls are appropriate for property, financial institution, that the agent is holding
plant and equipment, except investment securities in the client’s name, an
Disposal of fully depreciated PPE items. auditor most likely gathers evidence in support of
management’s financial statement assertions of
existence and
In auditing plant assets and accumulated Rights and obligations
depreciation for proper valuation, the auditor
should do all of the following, except Where no independent stock transfer agents are
Physically inspect major plant asset additions. employed and the corporation issues its own stocks
and maintains stock records, canceled stock
Which of the following questions would an auditor certificates should
least likely include on an internal control Be defaced to prevent reissuance and attached to
questionnaire concerning the initiation and their corresponding stubs.
execution of equipment transactions?
Are procedures in place to monitor and properly Employees bond employees who handle cash
restrict access to equipment? receipts because fidelity bonds reduce the
possibility of employing dishonest individuals and
The audit objective to determine that cash in bank Deter dishonesty by making employees aware that
is properly disclosed can be met through which of insurance companies may investigate and
the following tests of details of balances? prosecute dishonest acts.
Foot the outstanding check list and deposits in
transit. Under which of the following circumstances would
an auditor be most likely to intensify an
An internal control objective concerning PPE examination of a P500 imprest petty cash fund?
acquisitions is that they be recorded at the correct Reimbursement occurs twice each week.
amounts and in the proper period, and property
classified. In which of the following conditions To test the accuracy of the current year’s
would an auditor most likely assess a high level of depreciation charges, an auditor should rely most
risk of material misstatements? heavily on
Most additions are self-constructed by the entity. Re-computation of depreciation for a sample of
plant assets.
Which of the following controls would be most
effective in assuring that the proper custody of In the audit of PPE, the auditor tries to do all of the
assets in the investing cycle is maintained? following, except to
The recorded balances in the investment subsidiary Assess the adequacy of replacement funds.
ledger are periodically compared with the contents
of the safe-deposit box by independent personnel. Which of the following is not a proper control over
investment securities?
Separation of custodial and treasury functions.
An entity with a large volume of customer
remittance by mail could most likely reduce the risk
of employee misappropriation of cash by using
A bank lockbox system
Which of the following control activities is most

likely to prevent the improper disposition of
equipment?
A separation of duties between those authorized to
dispose of equipment and those authorized to
approved removal work orders.
The primary responsibility of a bank acting as

registrar of capital stock is to
Verify that stock is issued in accordance with the
authorization of the board of directors and the
articles of incorporation.
When auditing interest-bearing debt, the auditor

should ______ verify the related interest expense
and interest payable.
simultaneously
An unrecorded check issued during the last week of

the year would most likely be discovered by the
auditor when the
Cutoff bank statement is reconciled.

Foot The Outstanding Check List and Deposits in Transit

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While performing an audit of cash, an auditor Which of the following is the most effective audit

Which of the following control activities is most

The primary responsibility of a bank acting as

When auditing interest-bearing debt, the auditor

An unrecorded check issued during the last week of

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