Which of the Following Audit Procedures Is Most Likely to Detect

question 55

Multiple Choice

Which of the following audit procedures is most likely to detect lapping by the accounts receivable clerk?

• A)Use the cutoff bank statement to trace all cheques dated before the balance sheet date to the outstanding cheque list on the bank reconciliation.
• B)Use the cutoff bank statement to determine if the bank recorded all deposits in transit per the bank reconciliation on the first business day after the balance sheet date.
• C)Compare the detail of cheques listed on a sample of deposit slips to the detail of customer credits listed on the day's posting to the customer accounts in the subsidiary ledger.
• D)Prepare a schedule of inter-bank transfers for a few days before and after the balance sheet date.

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Definitions:

Complete Portfolio

A diversified investment portfolio that contains a mix of assets in varying proportions, tailored to an investor's financial goals, risk tolerance, and investment horizon.

After-inflation, After-tax

A financial metric that reflects the real purchasing power of earnings or investment returns after accounting for inflation and taxation.

Rate of Return

The gain or loss of an investment over a specified period, expressed as a percentage of the investment's cost.

Normally Distributed Returns

A pattern in the investment world where the returns of a financial instrument are symmetrically distributed around the mean.