In the Course of Examining the Cut Off Bank Statement

question 19

Multiple Choice

In the course of examining the cut off bank statement for a client, an auditor is puzzled to discover that none of the cheques listed as outstanding on the year-end bank reconciliation has cleared the bank.This could be an indication that the client:

• A)Is engaged in kiting.
• B)Has overstated the year-end balance of cash.
• C)Mailed the cheques to vendors after the year end.
• D)Left the cash receipts journal open after the year end.

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Definitions:

Balance Sheet

A financial statement that provides a snapshot of a company's financial position at a particular time, showing assets, liabilities, and shareholders' equity.

Retained Earnings Statement

A report detailing changes in retained earnings, including net income and dividends, over a specific period.

Fiscal Year

A one-year period that companies and governments use for financial reporting and budgeting, not necessarily coinciding with the calendar year.

Treasury Stock

Treasury stock consists of shares that were issued and subsequently reacquired by the company, not retired but held in the company's treasury.