After Testing the Bank Reconciliation and Inspecting the Cutoff Bank

question 10

Multiple Choice

After testing the bank reconciliation and inspecting the cutoff bank statement received from the bank,the auditor has determined that there are two outstanding cheques from the list on the bank reconciliation that have still not cleared the bank.The auditor's next step should be to

• A)trace the details of the two cheques to the cash disbursements journal.
• B)trace the details of the two cheques to their associated expense accounts.
• C)reperform the calculations in the bank reconciliation.
• D)compare the total of the bank reconciliation to the bank confirmation.

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Definitions:

High-margin Items

Products or services that generate a significantly higher percentage of profit compared to their cost of production or acquisition.

Low-margin Items

Products or services that generate a minimal profit margin, often sold to attract customers or achieve volume sales.

Contribution Margin Ratio

A financial metric indicating the portion of sales revenue that is not consumed by variable costs and therefore contributes to covering fixed costs.

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit.