1. Examining a sample of cancelled checks for a valid signature tests which of the following assertions for cash?

a) Authorization

b) Completeness

c) Cutoff

d) Accuracy

2. The primary purpose of sending a standard confirmation request to financial institutions with which the entity has done business during the year is to :

a) Detect kiting activities that may otherwise not be discovered.

b) Corroborate information regarding deposit and loan balances.

c) Provide the data necessary to make a proof of cash.

d) Request information about contingent liabilities and secured transactions.

3. An interbank transfer schedule :

a) Is another name for the proof of cash.

b) Helps the auditor test for kiting.

c) Is on a standard bank confirmation.

d) Is used to examine entity bank reconciliations.

4. As one of the year-end audit procedures, the auditor instructed the entity's personnel to make a standard bank confirmation request for a bank account that had been closed during the year. After the entity's treasurer had signed the request, it was mailed to the bank by the assistant treasurer. What is the major flaw in this audit procedure?

a) The confirmation request was signed by the treasurer.

b) Sending the request was meaningless because the account was closed before the year-end.

c) The request was mailed by the assistant treasurer.

d) The CPA did not sign the confirmation request before it was mailed.

5. In establishing the existence and ownership of a long-term investment in stock of a publicly traded company, an auditor should inspect the securities or :

a) Correspond with the investee company to verify the number of shares owned.

b) Inspect the audited financial statements of the investee company.

c) Confirm the number of shares owned that are held by an independent custodian.

d) Determine that the investment is carried at the lower-of-cost-or-market.

6. The fact that a company has significant amounts of cash in the form of foreign currency would raise the inherent risk of which management assertion regarding cash?

a) presentation & disclosure

b) rights & obligations

c) completeness

d) valuation and allocation

7. Which of the following schemes might be detected through the use of a bank cutoff statement?

a) Checks were written in amounts in excess of invoice amounts in a collusion scheme in which the accounts payable clerk was misappropriating refunds of excess payments.

b) Checks were written near year-end to reduce the balance in accounts payable but were not mailed until a week after year-end.

c) Checks were written to nonexistent payees and mailed to the home addresses of officers.

d) Checks received by the cashier were not deposited and accounts receivable was not appropriately reduced.

8. Which of the following audit procedures would be most effective in providing evidence regarding the existence of cash and cash equivalents?

a) Test translation of foreign currency transactions.

b) Review bank confirmations to verify bank balances.

c) Review bank reconciliations to verify amounts.

d) Perform analytical procedures to determine if amounts and volume of transactions match expectations.

9. An auditor is establishing procedures for testing management's assertions regarding existence in relation to reported investments in marketable securities. The auditor is considering using confirmations or observation. Which of these techniques would be appropriate for obtaining evidence about existence?

a) Neither confirmations nor observation

b) Observation only

c) Both confirmations and observation

d) Confirmations only

10. King Corporation often transfers funds from its general account into a special account that is used exclusively to make debt payments. Near the end of the year, the company had the following transfers:

From General Account To Special Account Amount Recorded in Books Recorded by Bank Recorded in Books Recorded by Bank $35,000 12/29/17 1/2/14 12/31/17 12/31/17 $20,000 12/30/17 12/31/17 1/2/18 1/2/18 $30,000 12/31/17 1/2/18 12/31/17 1/2/18 $40,000 1/2/18 1/4/18 12/31/17 1/3/18