On Receiving the Bank Cutoff Statement,the Auditor Should Trace

question 65

Multiple Choice

On receiving the bank cutoff statement,the auditor should trace:

• A)Deposits in transit on the year-end bank reconciliation to deposits in the cash receipts journal.
• B)Checks dated prior to year-end to the outstanding checks listed on the year-end bank reconciliation.
• C)Deposits listed on the cutoff statement to deposits in the cash receipts journal.
• D)Checks dated subsequent to year-end to the outstanding checks listed on the year-end bank reconciliation.

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Definitions:

Cash Paid

The actual outflow of cash during a period for expenses, investments, and other financial activities.

Perpetual Inventory System

An inventory tracking system where updates are made continuously as transactions occur, providing real-time inventory levels.

Gross Method

An accounting method where purchases are recorded at their gross price, without deducting any discounts at the time of purchase.

Merchandise

Products or goods that are bought, sold, or traded in the course of business.